Growing Perpetuity Calculator
Enter the first payment, the growth rate and the discount rate.
Present value
β
Enter values above
Net discount rate
β
Multiple of first payment
β
Value if growth were 1% higher
β
Cash flow in year 20
β
Value sensitivity
β
Worked example
With the default inputs shown below, this calculator returns the following results:
| Input | Value |
|---|---|
| First payment ($) | 10000 |
| Growth rate (%) | 3 |
| Discount rate (%) | 7 |
| Result | Value |
|---|---|
| Present value | $250,000 |
| Net discount rate | 4.00% |
| Multiple of first payment | 25x |
| Value if growth were 1% higher | $333,333 |
| Cash flow in year 20 | $17,535 |
| Value sensitivity | $285,714 |
Values shown are produced by this page in your browser; change any input to update them.
How to use the Growing Perpetuity Calculator
- First payment ($) β default 10000
- Growth rate (%) β default 3
- Discount rate (%) β default 7
- Press Calculate to update the results instantly.
Frequently asked questions
Because the formula divides by the difference between them. As that difference shrinks the denominator approaches zero and the present value rises without limit β a mathematical result, not a realistic one.
No more than long-run inflation, typically 2β3%. Anything above that implies the income stream outgrows the whole economy forever.
Terminal values in company valuations, endowments, ground rents and index-linked income streams. Always sanity-check the implied multiple against comparable assets.