##### Asked by: Ubaldo Schoenmakers

asked in category: General Last Updated: 16th January, 2020# What is value of perpetuity?

**Perpetuity**is a perpetual annuity, it is a series of equal infinite cash flows that occur at the end of each period and there is equal interval of time between the cash flows. Present

**value**of a

**perpetuity**equals the periodic cash flow divided by the interest rate.

Correspondingly, what is an example of a perpetuity?

Although a **perpetuity** is somewhat theoretical (can anything really last forever?), classic **examples** include businesses, real estate, and certain types of bonds. One of the **examples of a perpetuity** is the UK's government bond, known as a Consol.

Likewise, what is level perpetuity? **Level perpetuity** in which the payments are constant over time. Present Value of a **Level Perpetuity** PV = the present value of a **level perpetuity** PMT = the constant dollar amount provided by the **perpetuity** i = the interest (or discount) rate per period.

Also know, what is the future value of a perpetuity?

There is no end date, so there is no **future value** formula. To find the **FV of a perpetuity** would require setting a number of periods which would mean that the **perpetuity** up to that point can be treated as an ordinary annuity. There is, however, a PV formula for perpetuities.

How do you calculate the terminal value of a perpetuity?

**Perpetuity** Growth Model , where the discount rate is correspondingly the weighted average cost of capital. To **determine** the present **value** of the **terminal value**, one must discount its **value** at T_{0} by a factor equal to the number of years included in the initial projection period.