# Definition for : Gordon-Shapiro formula

The Gordon-Shapiro formula calculates the Value of a Perpetuity growing at a constant rate g: PV = F/(k-g), where PV is the Present value of this Perpetuity, F the Perpetuity, k Cost of capital. (k>g)

(See Chapters Chapter 16 The time value of money and net present value and Chapter 32 Capital structure and the theory of perfect capital markets of the Vernimmen)

To know more about it, look at what we have already written on this subject