Calculating your present value is straightforward once you know the Perpetuity formula and what each input means. This guide explains the method in plain language, walks through a manual calculation, and gives worked examples you can follow — then you can do it instantly with the Perpetuity Calculator.
What is Perpetuity?
The Perpetuity calculation tells you your present value from a few simple inputs. The figure you are solving for here is the present value, expressed in INR.
The Perpetuity formula
The core formula is:
Present value = Annual payment ÷ (Discount rate ÷ 100)Here is what each input means:
- Annual payment — a money amount. Example: ₹50,000.
- Discount rate — a percentage, such as an annual rate. Example: 5%.
How to calculate it step by step
- Write down the annual payment (for example, ₹50,000).
- Write down the discount rate (for example, 5%).
- Apply the formula above to get your present value.
- Double-check the result with the Perpetuity Calculator.
Worked examples
Example 1
| Input / Output | Value |
|---|---|
| Annual payment | ₹50,000 |
| Discount rate | 5% |
| Present value | ₹10,00,000 |
With annual payment of ₹50,000 and discount rate of 5%, the present value works out to ₹10,00,000.
Example 2
With annual payment of ₹1,00,000 and discount rate of 5%, the present value works out to ₹20,00,000.
| Result | Value |
|---|---|
| Present value | ₹20,00,000 |
Example 3
With annual payment of ₹25,000 and discount rate of 5%, the present value works out to ₹5,00,000.
| Result | Value |
|---|---|
| Present value | ₹5,00,000 |
Tips for an accurate result
- Keep your units consistent — mixing, say, months with years or grams with kilograms is the most common source of error.
- Round only at the very end. Rounding inputs early can shift the final answer noticeably.
- Re-run the numbers whenever an input changes, rather than estimating from an old result.
- Annual rates must be converted to the period you are calculating for (for example, divide an annual rate by 12 for a monthly figure).
Prefer not to do the maths by hand? — the Perpetuity Calculator does it instantly, for free, with the formula and a worked example built in.
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