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    Perpetuity

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    Ella
    A perpetuity is a series of cash flows that continue indefinitely, used in valuation analysis to find the present value of a company's future projected cash flows and terminal value. Perpetuities are calculated by discounting future cash flows back at a certain rate and have been issued by governments as bonds that pay a coupon forever.

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    Perpetuity

    Uploaded by

    Ella
    45 views1 page
    A perpetuity is a series of cash flows that continue indefinitely, used in valuation analysis to find the present value of a company's future projected cash flows and terminal value. Perpetuities are calculated by discounting future cash flows back at a certain rate and have been issued by governments as bonds that pay a coupon forever.

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    A perpetuity is a series of cash flows that continue indefinitely, used in valuation analysis to find the present value of a company's future projected cash flows and terminal value. Perpetuities are calculated by discounting future cash flows back at a certain rate and have been issued by governments as bonds that pay a coupon forever.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    45 views1 page

    Perpetuity

    Uploaded by

    Ella
    A perpetuity is a series of cash flows that continue indefinitely, used in valuation analysis to find the present value of a company's future projected cash flows and terminal value. Perpetuities are calculated by discounting future cash flows back at a certain rate and have been issued by governments as bonds that pay a coupon forever.

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    PERPETUITY

    Perpetuity in the financial system is a situation where a stream of cash flow payments


    continues indefinitely or is an annuity that has no end. In valuation analysis, perpetuities
    are used to find the present value of a company’s future projected cash flow stream and
    the company’s terminal value. Essentially, a perpetuity is a series of cash flows that
    keep paying out forever.

    The concept of a perpetuity is used in numerous financial models. The British


    government issued perpetuities in the form of bonds called consols. Upon purchase, a
    consol pays a small coupon forever (or until the debtor decides to redeem it).

    A perpetuity calculation in finance is used in valuation methodologies to find the present


    value of a company's cash flows. This is done by discounting back at a certain rate.

    Source:
    https://corporatefinanceinstitute.com/resources/knowledge/finance/perpetuity/
    https://www.investopedia.com/ask/answers/060915/what-are-differences-between-
    annuity-derivation-and-perpetuity-derivation-time-value-money.asp

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