Perpetuity

In finance, a perpetuity is an annuity that has no end, or a stream of cash payments that continues forever. There are few actual perpetuities in existence. For example, the United Kingdom (UK) government issued them in the past; these were known as consols and were all finally redeemed in 2015.

Real estate and preferred stock are among some types of investments that affect the results of a perpetuity, and prices can be established using techniques for valuing a perpetuity.[1] Perpetuities are but one of the time value of money methods for valuing financial assets.

Perpetuities can be structured as a perpetual bond and are a form of ordinary annuities. The concept is closely linked to terminal value and terminal growth rate in valuation.

  1. ^ "Perpetuity". Investopedia. 24 November 2003. Retrieved 26 May 2016.