The formula to calculate the PV of Perpetuity (PVp) is:
\[ PVp = \frac{D}{DR} \]
Where:
PV of Perpetuity is the present value of a constant stream of identical cash flows with no end.
Dividend is a distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.
Discount Rate is the interest rate charged to commercial banks and other depository institutions for loans received from the Federal Reserve Bank’s discount window.
Let's assume the following values:
Using the formula:
\[ PVp = \frac{D}{DR} \]
Evaluating:
\[ PVp = \frac{35}{0.12} \]
The PV of Perpetuity is 291.666666666667.
| Dividend | Discount Rate | PV of Perpetuity |
|---|---|---|
| 30 | 10% | 300.000000000000000 |
| 30 | 11% | 272.727272727272748 |
| 30 | 12% | 250.000000000000000 |
| 30 | 13% | 230.769230769230774 |
| 30 | 14% | 214.285714285714278 |
| 30 | 15% | 200.000000000000000 |
| 31 | 10% | 310.000000000000000 |
| 31 | 11% | 281.818181818181813 |
| 31 | 12% | 258.333333333333371 |
| 31 | 13% | 238.461538461538453 |
| 31 | 14% | 221.428571428571416 |
| 31 | 15% | 206.666666666666686 |
| 32 | 10% | 320.000000000000000 |
| 32 | 11% | 290.909090909090935 |
| 32 | 12% | 266.666666666666686 |
| 32 | 13% | 246.153846153846132 |
| 32 | 14% | 228.571428571428555 |
| 32 | 15% | 213.333333333333343 |
| 33 | 10% | 330.000000000000000 |
| 33 | 11% | 300.000000000000000 |
| 33 | 12% | 275.000000000000000 |
| 33 | 13% | 253.846153846153840 |
| 33 | 14% | 235.714285714285694 |
| 33 | 15% | 220.000000000000000 |
| 34 | 10% | 340.000000000000000 |
| 34 | 11% | 309.090909090909065 |
| 34 | 12% | 283.333333333333371 |
| 34 | 13% | 261.538461538461547 |
| 34 | 14% | 242.857142857142833 |
| 34 | 15% | 226.666666666666686 |
| 35 | 10% | 350.000000000000000 |
| 35 | 11% | 318.181818181818187 |
| 35 | 12% | 291.666666666666686 |
| 35 | 13% | 269.230769230769226 |
| 35 | 14% | 249.999999999999972 |
| 35 | 15% | 233.333333333333343 |
| 36 | 10% | 360.000000000000000 |
| 36 | 11% | 327.272727272727252 |
| 36 | 12% | 300.000000000000000 |
| 36 | 13% | 276.923076923076906 |
| 36 | 14% | 257.142857142857110 |
| 36 | 15% | 240.000000000000000 |
| 37 | 10% | 370.000000000000000 |
| 37 | 11% | 336.363636363636374 |
| 37 | 12% | 308.333333333333371 |
| 37 | 13% | 284.615384615384585 |
| 37 | 14% | 264.285714285714278 |
| 37 | 15% | 246.666666666666686 |
| 38 | 10% | 380.000000000000000 |
| 38 | 11% | 345.454545454545439 |
| 38 | 12% | 316.666666666666686 |
| 38 | 13% | 292.307692307692321 |
| 38 | 14% | 271.428571428571388 |
| 38 | 15% | 253.333333333333343 |
| 39 | 10% | 390.000000000000000 |
| 39 | 11% | 354.545454545454561 |
| 39 | 12% | 325.000000000000000 |
| 39 | 13% | 300.000000000000000 |
| 39 | 14% | 278.571428571428555 |
| 39 | 15% | 260.000000000000000 |
| 40 | 10% | 400.000000000000000 |
| 40 | 11% | 363.636363636363626 |
| 40 | 12% | 333.333333333333371 |
| 40 | 13% | 307.692307692307679 |
| 40 | 14% | 285.714285714285666 |
| 40 | 15% | 266.666666666666686 |