Perpetuity
Subject: Finance | Topics:

Perpetuity is basically a stream of cash flows that never terminates. It is a very important concept in corporate finance. The concept of a perpetuity is also used in financial theory, such as in the dividend discount model (DDM). The basic formula used to calculate a perpetuity is cash flows divided by some discount rate. The most counter-intuitive part of perpetuity is the fact that it has a finite value.

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