Perpetuity

A perpetuity is an infinite stream of cash flows of identical magnitude and equal spacing in time.

E.g., Perpetuities, consol bonds

PV of Perpetuity = $\frac{CF}{R}$

Again, this formula assumes that the first cash flow occurs at t=1.

Simple Example

How much do you have to save now to be able to withdraw $100 at the end of each year, forever, 
if you earn 5% per annum?

PV = $\frac{100}{0.05}$ = $2000