WhatsApp us


Need a hand with your homework? Get expert help now and smash those grades! 💯 Submit your assignment today!

100% human expertise, no AI. 🤖

  • Experienced Tutors
  • On-Time Delivery
  • Plagiarism-Free Work
myhomeworkhelp reviews
Order Homework Help From Experts
Please enable JavaScript in your browser to complete this form.
Please enter the details of your homework requirements.
What should we call you?
Zero spam guarantee.
For order updates only.

Hire Best Homework Helpers

MyHomeworkHelp is proud to work with a team of expert professionals with verified academic credentials, selected for their proven skills in their field of study.

Confidently hire experts from the top universities across the globe.

Benefits & Assurances

subjects covered

All Subjects Covered

subjects covered

Refund Guarantee

subjects covered

Experienced Tutors

subjects covered

Unlimited Revisions

subjects covered

On Time Delivery

subjects covered

Chat With Expert

Perpetuity is simply described as the project that will serve a constant cash flow and will keep on repeating itself forever. In case if cost of the entire capital is held as a stagnant and thus total amount of capital grows over at the steady rate, then perpetuities can lend themselves like a speedy present value solution. This is a very basic rule that helps in the estimation. Even though these formulas seem very intimidating on the very first look, the use of it becomes a quickly learned and accepted thing.

3.1 A the simple perpetuity formula

With a constant unchanging interest rate which is 10%, what do you think, how big a value is to be invested at the present market to receive a similar dollar value of the interest that gives $2 every year? The table no. 3.1 will showcase the current present values among the future payments which have the perpetuity of $2 for an eternity with the interest rate of 10% every year.

Perpetuities 1

Notice how the payment that is made at the time of 0 is. Also notice that payment of an individual becomes smaller on the outwards.

The perpetuity net present value can be $20 if you have the will to wait for an eternity to sum up the many uncountable numbers. Though when you will be using a spreadsheet, then you can put and add the initial fifty terms which are there in the first, and then you get the PV that is of $19.83. When you sum up the 50 first terms, then   you get the PV that is of $19.9986. Calculatedly, the sum will make up for the $20 sharp. The reason for such will be because there will be a shortcut method available to compute the total present value, capital cost of being constant.

Perpetuities 2 The time ‘1’ is the subscript used in the above given formula. This is to make remind of the very first cash flow which never occurs in the present time, but in the following year – cash flows will remain as of the exact amount for the upcoming consecutive years.

Perpetuities 3 ANECDOTE

The Oldest Institutions and Perpetuities

Assumption of that projects will last a life time is what perpetuities are. However, nothing lasts forever. This is the oldest western institution is Catholic Roman Church and is 2000 years old. And oldest corporation that exists is of reformed greatly as a protestant church for the Dutch in the New York City in United States. This place was formed in the 1628 and was granted a charter by King William in the 1696. Canadian Hudson’s bay firm was established in the year 1670 which is the acclaimed oldest company that is continuous on going incorporation.

The naval base in Guantanamo is leased in 1903 from Cuba from United States as a perpetuity in exchange of 2000 pesos every year in U.S. gold. This sum was equivalent to a sum of $4085. Fidel Castro had once restated time by saying “whatever is indefinite lasts 100 years”. Anyway, Cuban government will not recognize the agreement as a valid one and this does not accept that many payments that are made annually. However, they were right on not expelling the Americans either. Which itself is a wise move.

This is in fact the most easy way to get accustomed with the perpetuities and to solve problems.

Perpetuities 4 3.1 B The growing perpetuity formula

In place of the equal value of cash, what if the cash flow expand in number with the progressing time? The formula for growing perpetuity allows maintaining a fixed and unchanging rate g for a certain period, and gives a less interest rate. The table 3.2 displays the increasing perpetuity which pays $2 in the upcoming year, with a growth rate – 5% and the cost of capital 10%. The PV of the initial 30 terms will sum to give $30.09. First of the 100 terms will give the value of $39.64. Initial 200 terms will be $39.98. Hence the formula will be,

Perpetuities 5 Perpetuities 6 As the ‘1’ subscript indicates the cash flows being in the coming session and is not necessary as the entire pattern of cash flows is different than the initial one. The existing interest rate is the one which reduced by the exponential growth rate that is of the cash flows. The coming table shows the initial application that you make in the growth of one year. Hence, a cash flow is discounted to (1 + r)30 however, it is multiplied by the growth factor (1 + g)29. You will be encountering applications of growing such perpetuity formula. Let us see an example, common assumptions are made in cases of rate of inflation by the cash flows. You will be using the formula later to obtain the associative yet important values in this book. The design is called pro formulas.

Perpetuities 7 You must be careful in using cash flow the upcoming year as numerator in any formula. Subscript ‘1’ is to remind that to you. Let us proceed with an example, when you wish to use the formula all on your own firm it earns $100 million in the present year with an expectation to continue growing at 5% rate for eternity, the cash flow then must be in the specific numerator as $105 million and not simply $100 million.

What if a cash flow grew at a faster rate compared to that of interest rate, then? The formula would indicate value that is negative PV. This is for the scenario that would be nonsensical. The PV is less than infinity in the perpetuity formula and will be lesser than the boundary of infinity as the present dollars for each term is a of the previous time period. If the g was greater than the r cash flow for a year later will be more than that of today’s price. With an example, the discount rate being 10% growth rates of all cash flows g = 15%. This is the initial set of cash flow will be $2 * 1.15 = $2.30 and will discount up to $2.09 at the present market. Second of the cash flow will be $2 * 1.152 = $2.645 which will give $2.186. Present available value of the cash flow will be higher. Infinite numbers will increase the yielding of infinity as a value. Infinity value is not sensible and has a definite sum of money that can be used. Thus, growing and perpetuity formula will give rise to the negative value only if, g ≥ r like it should.

Perpetuities 8 3.1C Perpetuity application: stock valuation with a Gordon growth model

With fixed interest rates and the growth rates which are the external payment requirement, the perpetuities that are correctly placed very rarely. These can be helpful for a back to envelope estimate. Consider a business that is both mature ad stable along with $1 million profits the coming year. As the company is stable, the profits are expected to grow on inflation rate of 2% every year. The meaning is deciphered that the company is going to earn the value of $1,020,000 at a time span of 2 years. For 3 years, it will be $1,040,400. The firm will be facing a certain capital cost that is 8%. This suggests that the firm should be more worthy than what it is,

Perpetuities 8 In the true life there is going to be many uncertainties in the significant life: the upcoming years profit may not be same to this year, the growth rate of a firm may be different from the previous one or, capital cost may be different too. Hence, the $16.7 million must be considered as a fast-and-dirty approximation. This may even be considered as the upper limit.

The growing model is directly applied in most times to any stock market. If you have the believe that the stocks dividends will all grow up to 5% for eternity, and pay a dividend of 10% and one expect the dividend to be $10 the coming year, then this would be the stock price at the current date,

Perpetuities 10 Would be absolutely correct. The growth of the perpetuity is often termed as the renowned Gordon growth model, in honor to the inventor, known as Myron Gordon.

In the year of 2004, yahoo finance listed the firm General Electric as the one having a certain dividend yield of the rate 2.43%. Dividends when divided by stock price, i.e., D/P are dividend yield. So, let’s rearrange the formula of 3.2:

Perpetuities 11 Hence, you can understand that all of the real existing market believes on an definite cost capital for firm General Electric will exceed the growing rate of the dividends by 2.4%. Yahoo further links a small summary of the GE that will pay $7.643 billion as in the dividend of a year in the year 2003 & $6.358 billion on the year 2001. Over the course of two year, growth rate will be around 9.6% every year ($6.358 * 1.0962 ≈$7.64). Thus, if you think that there can be 9.6% per year, then there can be a good representation that too of the total future growing rate of the dividends. All financial markets will value the GE as if,

Perpetuities 12 Assuming, this being a prominent factor in the world of finance. To loosely speak, cousins of all various cash flows are the corporate stockholders. Hence, you can think of a certain value of present stock as the total worth of the earning stream that will give the product. Recall this from chapter no. 1, about the owners receiving the dividends and cash flows, which is paid out as the later one. (In the chapter 13, you will be explained about these earnings in a more detailed manner.) This is more common issue to assume that value of a firm is,

Perpetuities 13 Hence, on the journey of determining the rate of return, investors need (cost of capital), a current stock price, that the everlasting growing rate of the earnings. Yahoo finance shows us the required information again. GE was listed as ‘trailing P/E’ ratio by them. Calculative current stock value of the price dividend will be by the historical earnings which is 21. The listed ratio is however, is calculated similar to the price which is divided as one of current earnings growth rate which sums up to 18.5. This perpetuity formula for growth which is to bring the concepts closer. Yahoo finance is to tell that the GE’s earnings are of a growth rate which is 6.3%. Then the g that is in the given formula will let you assume the current earnings growth rate which is a long term thing of growth rate. All that you need to do to rearrange this formula of the return rates:

Perpetuities 14 Looking at the GE’s P/E ratio, and the growth rate, investors expect the rate of return to be that of around 12% on a yearly basis.

You must understand that these are approximated rates, which shouldn’t be taken seriously at all. The accuracy is not a very important factor. The GE of a brand will not be lasting forever, so, the earnings aren’t that of the cash flows that need to be there. The numbers that are given are not at all uninteresting and discount rate is that not constant.The earnings that will not be growing at that 6.3% forever. GE is greatly a very steady firm who is mostly to be there for a far too off time. You can do that lot bad than to assume that with a capital costs, the GE ownership will be around 12% yearly. It might rather be somewhat around 10% to 14%.

Perpetuities 15 Perpetuities 16

Links of Previous Main Topic:-

Links of Next Financial Accounting Topics:-

Your Price: $15.00 $13.99 🔥

Pricing may change based on requirements

Get Homework Help In

Maths and Statistics


Humanities & Arts


Essay Writing

How Our Homework Service Works

FAQ number 1

Share your requirements

FAQ number 2

Make secure payment

FAQ number 3

Get homework answers

FAQ - Our Homework Help Services

We have put together some commonly asked questions.


Is there a website that can do my homework?

Yes, if you are looking for such a site, MyHomeworkHelp is one of the leading homework help websites that can do your homework and assist with various academic needs. Here's all you need to know about our team and how they provide flawless homework help.

If you find yourself thinking, "I need to pay someone to do my homework," our team is ready to assist. It's common for students to seek help with their homework, and our experts are prepared to provide personalized support tailored to your needs.

You can visit www.myhomeworkhelp.com to get all types of homework-related help from our experts.


What is the best homework help website?

The best homework help website enhances students' experience of getting homework assistance from experts. MyHomeworkHelp, recognized as one of the best online homework help platforms, serves as both a guide and a solution provider for students. We've been rocking the homework help scene since 2012, assisting over 20k students, and we must be doing something right because more than 70% of them keep coming back for more. Whether you need help understanding concepts, completing assignments, or getting your homework done, MyHomeworkHelp is here to support your academic journey as the best college homework website.


How can I get help with my homework?

1. Tell us your homework details

To get started with online homework help, simply choose the type of homework assistance you need. When filling out the order form, make sure to provide detailed instructions, including the deadline, number of pages, grading rubric, and any other relevant information.

2. Confirm your order

Review the details of your homework order and proceed to make a secure payment using VISA, Mastercard, or PayPal. Once the payment is processed, our experts will begin working on your homework immediately.

3. Receive your order

The completed homework will be delivered directly to your email. This ensures that students receive their homework assistance on time and can meet their academic requirements without stress.


Do you guarantee plagiarism-free homework answers?

We take academic integrity very seriously and understand the importance of providing homework answers free of plagiarism. Our tutors are committed to delivering original and unique content for every assignment. Here are the steps we take to ensure your homework is plagiarism-free:

  1. Original Work: Each assignment is completed from scratch based on your specific requirements and guidelines.
  2. Expert Tutors: Our tutors are highly qualified and experienced in their respective fields, ensuring the work they produce is both original and high-quality.
  3. Plagiarism Detection: We use advanced plagiarism detection software to scan every assignment before delivery. This ensures that the content is unique and free of any copied material.
  4. No AI Usage: We guarantee that all work is 100% human-crafted expertise, with no AI-generated content involved. This ensures the authenticity and quality of the work provided.
  5. Quality Assurance: Our quality assurance team reviews each assignment for originality and adherence to academic standards before it is sent to you.

By following these stringent measures, we guarantee that the homework answers you receive are completely free of plagiarism and AI involvement. You can trust us to provide you with original and high-quality academic assistance.

For more information on our guarantees, please visit our guarantees page.


Is your homework service confidential?

Absolutely! Confidentiality is one of the basic guarantees of our service at MyHomeworkHelp.com.

When our customers make their homework orders, they know their information remains 100% confidential.

Even your homework writer will not be provided with your personal details. So, when you hire a professional homework helper on our website, rest assured that your information will remain private and safe.

For a comprehensive understanding of how we protect your privacy, please refer to our Privacy Policy.


How much do I need to pay to get my homework done?

We do not have monthly fees or minimum payments for our services. Each homework assignment is quoted a unique price, based on the tutor’s estimate of the time required to complete your work. There are no obligations, and you are free to discuss the price quote with the tutor.

When you decide to pay someone to do my homework, our pricing starts at $13.99 per page. The final pricing depends on various factors including the page count, deadline, nature of the task, and the homework writer’s level of expertise.

We offer flexible payment options, allowing you to make a partial payment to start working on your assignment and pay the remaining amount upon completion. This ensures no pressure of up-front payment and no hidden order costs.

Our dynamic pricing model takes into account the type of assignment, its urgency, and the complexity of the task. For instance, shorter deadlines and more complex assignments may increase the price. You can get an instant quote by selecting your assignment type, deadline, and page count on our website.

Get the help with your homework at competitive rates, tailored to your specific needs and deadlines. For more detailed information on pricing, please visit our pricing page.


Who are the experts who will help me with my homework?

We work with subject experts from all over the world. We hire them with the help of complex tests in the disciplines of their expertise. We also verify the IDs and academic transcripts of our homework writers to be sure that our experts have a bachelor's or master’s or a PhD degree. This is how we can be sure of the proficiency of our panel of experts who will help you with your homework. Here's all you need to know about our team and how they provide flawless homework help.

  1. Our team comprises top-tier homework helpers who excel in addressing and resolving questions on various topics. Each tutor effectively utilizes their expertise to concentrate on the core subject matter and thoroughly analyze it.
  2. Our professional tutors specifically craft each assignment tailored to students' requirements, including preferred formats, citation styles, and essential elements.
  3. Whether it’s coursework, dissertations, essays, or case studies, our platform guarantees timely college homework help across a wide range of academic papers. Don’t hesitate any longer; connect with our tutors when you seek help with your homework for perfect assignment solutions and improved grades.


Can I chat with my homework helper for updates?

Yes, you can certainly chat with your homework helper on our secure chatboard platform. MyHomeworkHelp.com provides a direct communication channel between you and your assigned expert (while maintaining privacy). This feature allows you to ask questions, clarify instructions, and provide additional information about your homework order to ensure that the help you receive is tailored to your specific needs.

You'll be notified by email whenever there are new messages for you, but we advise regularly checking your personal page to ensure no critical updates from your writer are overlooked.

Should you have an urgent matter to address, do not hesitate to contact the support team for assistance. This system ensures that students can stay updated on their homework paper progress and maintain clear communication with their experts.


What makes you the best homework helper?

MyHomeworkHelp is ranked as one of the best online homework helpers, providing exceptional support to students. We've been excelling in the homework assistance arena since 2012, assisting over 200k students, and consistently achieving high satisfaction rates, with more than 70% of our students returning for additional help. But do not take our word for it! See our independent reviews on google, facebook, sitejabber, and on Trustpilot. For all collated reviews, see here

We ensure our prices remain competitive and offer attractive discounts to make our services accessible. Our commitment to delivering plagiarism-free solutions guarantees the integrity and originality of your assignments. These attributes, combined with our dedication to personalized support and timely delivery, establish MyHomeworkHelp as the premier homework helper for all your academic needs.


How will I receive my homework order?

You'll receive the initial version of your paper as a secure, non-editable PDF within your specified deadline. This allows you to review the content and decide if any revisions or edits are required. Our homework service will refine the homework paper based on your feedback.

Should the document meet your expectations and not require any changes, you can simply approve the order and access the editable Word .doc file.