Perpetuity Growth Model Calculator
This calculator computes present values and terminal values using common perpetuity formulas and a two-stage terminal model. It supports level perpetuities, growing perpetuities (Gordon), single-stage terminal values from next-year free cash flow, and an explicit high-growth stage followed by a perpetual steady-state.
Use the method selector to pick the assumption set that matches your forecast horizon and available inputs. The tool provides closed-form formulas and geometric-series calculations so you can reproduce results in spreadsheets or audit logs.
Governance
Record 4a23a84a9bde • Reviewed by Fidamen Standards Committee
Present value of a perpetuity that grows at a constant rate g: PV = C / (r - g). Use when growth is expected to continue indefinitely at a steady rate lower than the discount rate.
Inputs
Advanced inputs
Growing perpetuity inputs
Level perpetuity inputs
Terminal from FCF inputs
Two-stage terminal inputs
Results
Present value (C / (r - g))
$14,285.71
| Output | Value | Unit |
|---|---|---|
| Present value (C / (r - g)) | $14,285.71 | USD |
Visualization
Methodology
Mathematical core: a growing perpetuity uses present value equals cash flow divided by (r minus g) when the discount rate r exceeds the growth rate g; a level perpetuity uses present value equals cash flow divided by r. Two-stage models discount an explicit high-growth series using a geometric series and then apply a Gordon-style perpetuity at the transition point.
Operational controls and model governance: validate discount and growth rate inputs and run sensitivity checks. Follow risk-management frameworks such as ISO 31000 and NIST guidance for secure handling of financial models and data.
Accuracy caveats: formulas assume constant rates and infinite horizon where specified. Small denominators (r minus g near zero) create unstable results; avoid or document scenarios where r is less than or equal to g. Preserve calculation logs for auditability.
F.A.Q.
What should I watch for when choosing r and g?
Ensure the discount rate reflects the appropriate risk and horizon. For growing perpetuities and terminals, require the discount rate to exceed the growth rate; if the two are close the result is highly sensitive and should be stress-tested. Document assumptions and run sensitivity tables.
Can I use negative growth rates?
Yes. The formulas accept negative g values. Negative long-term growth may be realistic for declining industries but check whether a perpetuity assumption remains appropriate.
How do I interpret the two-stage model outputs?
The two-stage model separates value generated during an explicit high-growth period from the continuing value after that period. Use the PV of the explicit stage and the PV of the terminal separately for transparency and reconciliation to underlying forecasts.
What accuracy and governance standards should I follow?
Adopt model risk and data-security practices aligned with ISO 31000 for risk management and relevant NIST guidelines for secure data handling. Maintain versioned input records and calculation logs for audit. For engineering or technical standards consult IEEE where relevant and follow workplace safety record practices per OSHA when handling physical data systems.
Sources & citations
- NIST (National Institute of Standards and Technology) — https://www.nist.gov
- ISO 31000 — Risk management — https://www.iso.org/iso-31000-risk-management.html
- IEEE Standards and guidance — https://standards.ieee.org
- OSHA — Occupational Safety and Health Administration — https://www.osha.gov
- CFA Institute — Equity Valuation Standards — https://rpc.cfainstitute.org/
- FASB ASC 820 — Fair Value Measurement — https://www.fasb.org/
- AICPA — Valuation Services — https://www.aicpa-cima.com/
Further resources
Versioning & Change Control
Audit record (versions, QA runs, reviewer sign-off, and evidence).
Record ID: 4a23a84a9bdeWhat changed (latest)
v1.0.0 • 2025-11-22 • MINOR
Initial publication and governance baseline.
Why: Published with reviewed formulas, unit definitions, and UX controls.
Public QA status
PASS — golden 25 + edge 120
Last run: 2026-01-23 • Run: golden-edge-2026-01-23
Versioning & Change Control
Audit record (versions, QA runs, reviewer sign-off, and evidence).
What changed (latest)
v1.0.0 • 2025-11-22 • MINOR
Initial publication and governance baseline.
Why: Published with reviewed formulas, unit definitions, and UX controls.
Public QA status
PASS — golden 25 + edge 120
Last run: 2026-01-23 • Run: golden-edge-2026-01-23
Engine
v1.0.0
Data
Baseline (no external datasets)
Content
v1.0.0
UI
v1.0.0
Governance
Last updated: Nov 22, 2025
Reviewed by: Fidamen Standards Committee (Review board)
Credentials: Internal QA
Risk level: low
Reviewer profile (entity)
Fidamen Standards Committee
Review board
Internal QA
Entity ID: https://fidamen.com/reviewers/fidamen-standards-committee#person
Semantic versioning
- MAJOR: Calculation outputs can change for the same inputs (formula, rounding policy, assumptions).
- MINOR: New features or fields that do not change existing outputs for the same inputs.
- PATCH: Bug fixes, copy edits, or accessibility changes that do not change intended outputs except for previously incorrect cases.
Review protocol
- Verify formulas and unit definitions against primary standards or datasets.
- Run golden-case regression suite and edge-case suite.
- Record reviewer sign-off with credentials and scope.
- Document assumptions, limitations, and jurisdiction applicability.
Assumptions & limitations
- Uses exact unit definitions from the Fidamen conversion library.
- Internal calculations use double precision; display rounding follows the unit's configured decimal places.
- Not a substitute for calibrated instruments in regulated contexts.
- Jurisdiction-specific rules may require official guidance.
Change log
v1.0.0 • 2025-11-22 • MINOR
Initial publication and governance baseline.
Why: Published with reviewed formulas, unit definitions, and UX controls.
Areas: engine, content, ui • Reviewer: Fidamen Standards Committee • Entry ID: 2396d0677248