A lump-sum payment may be combined with a structured settlement in order to meet immediate expenses, such as medical bills, repayment of debts, rehabilitation costs, and the like.
Guidelines to use present value calculator for perpetuity
Payment amount:
- Payment amount is the amount of money you receive per period.
- It should be greater than zero
Interest rate per period:
- Annual nominal interest rate at which perpetuity is discounted.
- Enter rate in terms of percentage. It should be greater than zero.
Payment at period:
- Payment at period is when the payment is made in a period.
- It can be either 'end of period' if the payment is made at the end of the period (Ordinary annuity, in arrears) or 'beginning of period' if the payment is made at the beginning of the period (Annuity due, in advance).
Result:
- The calculated present value of perpetuity.
Perpetuity is an annuity type with a stream of cash flow or payments that's infinite. Irrespective of when it starts, whether it is starting today, or starts in the future, or starts in 5 years, it is important to determine the present value of perpetuity to have an idea of the constant cash flows.
Calculate the present value of perpetuity with this calculator requiring just two inputs: payment amount, the interest rate per period and payment at a period (whether the beginning of period or end of period).
Even though the overall face value of a perpetuity is inestimable, its present value is not. Speaking in terms of the time value of money theory, the present value of a perpetual annuity is the sum of the discounted value of each cyclic payment of the perpetuity. Seeing that the discounted value of far future payments of the perpetuity scales down greatly and reaches close to zero, the present value of perpetuity is finite. In simple, the only factor that affects the market price of perpetuity is the discount rate required by the market. Using this online calculator with financial functions can save time when solving PV problems.
Note- Accuracy of these calculations is not guaranteed and they are solely meant to be used as a screening tool. The applicability of results may differ according to individual circumstances; hence it is advised that you obtain personal advice from qualified professionals.