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Perpetuity ((See Chapter 16 of the Vernimmen))
Perpetuity is a constant stream of cash flows without end. Its value can be calculated as follows: PV = F/k, where F is the amount of cash flow, k – the discounting rate.
The value of a perpetuity growing at a constant rate g can be calculated as follows: PV = F/(k-g), as long as k > g.
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