What does it do?
This present value of a perpetuity calculator works out the value today of an infinite stream of identical cash flows (Pmt) made at regular intervals over time, using a discount rate of i%.
Present Value of a Perpetuity Calculator Formula
The calculator uses the PV of a perpetuity formula as shown below:
PV = Pmt / i
Further details about the formula can be found at our present value of a perpetuity formula page.
Instructions
As can be seen the Excel PV of a perpetuity calculator, available for download below is used to compute the PV by entering details relating to the regular payment, and the discount rate.
Accordingly the calculator is used as follows:
Step 1
Firstly enter the regular payment amount (Pmt). The regular payment is the identical cash flow made each period for an infinite amount of time.
Step 2
Next enter the discount rate (i). It is important to realize that the discount rate is the rate used to discount each payment amount back from the end of the period in which is was made, to the beginning of period 1 (today). The rate should be for a period, so for example, if the period is a year, then the rate should be the yearly rate.
Step 3
Finally the present value of a perpetuity calculator works out the present value (PV). The answer is the value today (beginning of period 1) of an infinite stream of identical cash flows (Pmt) made at regular intervals over time, using a discount rate of i%. It is the present value of a perpetuity.
Present Value of a Perpetuity Calculator Download
The present value of a perpetuity calculator spreadsheet is available for download in Excel format by following the link below.
The present value calculator is one type of time value of money calculator for use in time value of money calculations, discover another at the links below.
Users use this present value calculator at their own risk. We make no warranty or representation as to its accuracy. We are covered by the terms of our legal disclaimer, which you are deemed to have read. This is an example of a present value of a calculator that you might use when considering how to calculate the present value of perpetuity. It is purely illustrative of a time value of money calculator. This is not intended to reflect general standards or targets for any particular business, company or sector. If you do spot a mistake in this perpetuity calculator, please let us know and we will try to fix it.
About the Author
Chartered accountant Michael Brown is the founder and CEO of Double Entry Bookkeeping. He has worked as an accountant and consultant for more than 25 years and has built financial models for all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a degree from Loughborough University.