Growing perpetuity

• This refers to a perpetuity that grows at a constant rate forever. Present value of such a growing perpetuity equals next years cash flow divided by the difference between the market capitalization rate and the growth rate. To be sustainable, growth rate must be less than the market capitalization rate.

• A constant stream of cash flows without end that is expected to rise indefinitely.

 Embedded terms in definition
 Capitalization rate
Cash flow
Growth rate
Market capitalization rate
Market capitalization
Present value
 Related Terms
 Gems growing equity mortgages

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