BizJourney
Home › Formulas › Perpetuity value

How to calculate Perpetuity value

The Perpetuity value formula, with plain worked examples you can check yourself.

Perpetuity value = CF ÷ r

Worked examples

CF = 250 · r = 10%Perpetuity value = 2,500
CF = 200 · r = 25%Perpetuity value = 800
CF = 50 · r = 5%Perpetuity value = 1,000

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

Practice Perpetuity value with real numbers

Quizzes, a CEO simulator, a real estate tycoon game and startup tools. Free to start, in 7 languages.

Play BizJourney free →