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How to Calculate the Interest Rates on Perpetuity

By Motley Fool Staff – Updated Oct 4, 2025 at 10:14 PM

Key Points

  • Perpetuities pay a fixed annual sum; interest rate calculated by dividing payment by price.
  • Example: $5,000 annual perpetuity for $60,000 has an 8.33% interest rate.
  • Validate investment value using Present Value formula, confirming fair price.
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