What is the use of a Perpetuity Calculator?
The Perpetuity Calculator is a financial tool used to calculate the value of an infinite series of constant payments or income streams that last forever. It helps investors and businesses determine the present value of a perpetuity given the payment amount and interest rate. The calculator is useful in valuing financial instruments like preferred stocks, bonds, or rental properties that generate constant cash flows without a specific end date.
Formula of Perpetuity Calculator
The formula used to calculate perpetuity is:
Present Value of Perpetuity (PV) = Payment (P) / Interest Rate (r)
How to Use the Perpetuity Calculator
To use the Perpetuity Calculator, simply input the payment amount (P) you receive or pay on a regular basis and the interest rate (r) in percentage form. The calculator will compute the present value of the perpetuity, which represents the amount you would need to invest today to receive those regular payments forever. Enter the values and click 'Calculate' to get your result. The clear button will reset the input fields.