Growing perpetuity represents an infinite stream of periodic payments that grow at a constant rate. The most common growing perpetuities you know are college endowment funds, where tuition and other related expenses increase over time. The concept also deals with valuing stocks, real estate, and other investment opportunities.
Finding the present value of perpetuities is very simple in terms of mathematics. It is equal to the fixed periodic cash flow PMT, divided by the respective interest rate r minus the constant growth rate per period g. You can use the template to calculate the present value of a perpetuity with growth.
This open-access Excel template is a useful tool for bankers, investment professionals, corporate finance practitioners, and portfolio managers.
Present Value of Growing Perpetuity is among the topics included in the Quantitative Methods module of the CFA Level 1 Curriculum. Gain valuable insights into the subject with our Math for Finance course.
You can also explore other related templates such as—Present Value of Annuity, Present Value of Annuity Due, and Present Value of Perpetuity.