What is Perpetuity? | Definition, Working, Advantages and Disadvantages
The term ‘perpetuity’ means what the word suggests – a never ending cash flow of a certain amount that goes on for an unspecified or unending time period. It is in essence a kind of annuity with periodic payments that begin at a certain time and then last perpetually.
The calculation of the present value of a perpetuity depends on various factors.The formula used to calculate the current value of a perpetuity is: