perpetuity
Sign in to saveIn finance, a perpetuity is an annuity with payments that continue indefinitely.
Wikidata facts
- Subclass of
- annuity
Show 1 more fact
- described by source
- Encyclopædia Britannica 11th edition
Sources (2)
via Wikidata · CC0
~7 min read
Encyclopedic overview
13 sectionsContents
- Types and assumptions
- Ordinary perpetuity
- Perpetuity due
- Level perpetuity
- Growing perpetuity
- {{Anchor|Detailed description}} Valuation
- Level perpetuity (ordinary perpetuity)
- Perpetuity due
- Growing perpetuity
- Applications
- {{Anchor|Real-life examples}} Examples
- References
- See also
In finance, a perpetuity is an annuity with payments that continue indefinitely.
Perpetuity formulas are used in time value of money and discounted cash flow valuation. Common applications include valuing shares under the dividend discount model, estimating terminal value in company valuation, and capitalising stabilised income in real estate appraisal.
Excerpted from Wikipedia’s “perpetuity” article, available under the CC BY-SA 4.0 licence.