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How to calculate Growing perpetuity

The Growing perpetuity formula, with plain worked examples you can check yourself.

Growing perpetuity = CF ÷ (r − g)

Worked examples

CF = 200 · r = 15% · g = 5%Growing perpetuity = 2,000
CF = 40 · r = 9% · g = 4%Growing perpetuity = 800
CF = 80 · r = 15% · g = 5%Growing perpetuity = 800

How to use it

  1. Write down the values for each letter in the formula.
  2. Do the brackets first, then divide or multiply.
  3. Check the units before you compare results.
  4. Compare the answer with last period or with a competitor to see if it is good or bad.

This formula belongs to Investing & Returns.

Related terms

DividendBondHedgingArbitrageLeverageAsset allocation

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