When to use this calculator
Value an ideal infinite payment stream growing at a constant rate. The discount rate must exceed growth, with both rates defined per matching period.
Explore the savings & interest calculators for other questions in this topic. For a related calculation, use the Inflation Adjusted Purchasing Power Calculator: Express a future nominal balance in today’s approximate purchasing-power terms.
PUTTING IT INTO PRACTICE
Growing Perpetuity: a worked example
The values below are an illustrative example, not a recommendation. Replace them with measurements or assumptions that match your question.
| Input | Example value |
|---|---|
| Next period payment | 100 |
| Discount rate (%) | 8 |
| Payment growth rate (%) | 3 |
| Result | 2,000 currency units |
- Check the input labels and enter the example values above.
- Apply the relationship: PV = next payment/(discount rate − growth rate).
- The result is 2,000 currency units, rounded for display.
How to interpret your result
The discount rate must exceed growth, with both rates defined per matching period.
Match the quoted rate to its compounding convention. A nominal rate, effective annual rate and continuous rate are not interchangeable. Contribution timing also matters when interest is included in a future-value model.
Frequently asked questions
Is a future savings value a forecast?
It is a scenario based on your entered rate and contributions. Changing rates, fees, tax or interrupted payments can change the actual outcome.
When is the growing perpetuity calculator useful?
Value an ideal infinite payment stream growing at a constant rate. The discount rate must exceed growth, with both rates defined per matching period.
How do I use the growing perpetuity calculator?
Enter next period payment, discount rate (%), payment growth rate (%). The result updates automatically. Use the units shown beside each input; the example values illustrate the method.
Which formula does this calculator use?
PV = next payment/(discount rate − growth rate).
What should I check before using the result?
The discount rate must exceed growth, with both rates defined per matching period.
How are results rounded?
Scalar numbers display up to six decimal places, with scientific notation for very large or small values. Text, fraction, date and schedule outputs use the format described on the tool. Intermediate calculations use JavaScript floating-point arithmetic. Keep sensible precision for your measurements.
Further reading
For background on this topic, see OpenStax: compound interest ↗. This is a topic reference, not an external review or endorsement of this tool.
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