Ever wondered how much a never-ending cash flow is worth today?
Perpetuity
Ever wondered how much a never-ending cash flow is worth today?
Imagine you receive $100 every year forever, and you want to know how much that stream of money is worth right now.
Think of it like this: $100 a year forever sounds great, but how much would you pay for that promise today? It's like saying, "Give me $100 now and then give me $100 more every year forever."
Example
If you could get $100 today and then $100 every year forever, what would you pay for that promise right now?
Remember this
The present value of a perpetuity is the amount you'd pay today for an endless stream of future cash flows.
Text adapted from Wikipedia, licensed under CC BY-SA 4.0.
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Educational content, not financial advice.
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