Perpetuity Present Value

The present value of a perpetuity is calculated using the formula PV = C / r, where PV represents the present value of the perpetuity, C is the amount of cash flow per period, and r is the discount or interest rate per period. A perpetuity is a series of equal payments at regular intervals that continue indefinitely. Practically, perpetuities are used to value financial instruments that offer a fixed cash flow with no end, such as certain types of bonds or preferred stocks.