The periodic amount is either flat or varies for growing perpetuity. Of course one can do that, but the consequence of doing so itself becomes pretty dire. Annuities are incredibly popular, and there are many insurance companies that sell them. So, if you can expect to earn a return of 5% from a similar bond and need to find the value of a perpetuity that pays $500 per year, you can use the formula. In my case, I will only be able to decide this for 4 years before I am forced to wirthdrawl based onlife expectancy.I know I know I will hear that this can be reinvested or some may have Roth accounts but by and large the masses in the private sector wont control the withdrawl rate for long. Suppose that you have the opportunity to buy a perpetuity for $60,000 that promises to pay you $5,000 every year, but you want to calculate what your rate of return (interest rate) will be. Given the possible risks, Jacob expects a valuation of a 16% discount rate of 16%. Annuities that continue payments forever, allowing the purchaser to leave the payments in his will, are perpetuities, but are also exceedingly rare. This information is educational, and is not an offer to sell or a solicitation of an offer to buy any security. So on and so forth, exogenic risk not accounted for by the existing data. Holders of Consols received a payment based on the original price they paid to purchase the bond. Sordid saga of Manchester Uniteds sale looks like a kind of football "acceptedAnswer": { Present Value of a Perpetuity = Annual Payment Discount Rate. Find the annual yield rate. Robinhood Financial LLC (member SIPC), is a registered broker dealer. I also do not believe science will come up with a means to expand life expectancy by 20 years in the next 30 years. Take a look at my two favorite real estate crowdfunding platforms. So the perpetuity formula is used to gauge the current value of the specific amount a bondholder would receive after every period.