Where does perpetuity collide?

In finance a perpetuity is a stream of equal cash payments that continues without end, and its whole value collapses to one formula: the payment divided by the discount rate, C over r. Gordon's 1959 Dividends, Earnings, and Stock Prices valued a share as the present worth of a dividend stream continuing forever, giving the growing-perpetuity result P = D/(k - g) that reduces to D/k when the payment is level. Securities of this shape have really existed, such as the British consols and other perpetual bonds that promised a fixed coupon and never came due. This referent is a cash-flow object priced as a present sum, not a legal limit on how long property may be tied up, and not an institutional fund an organisation chooses to keep forever.[1]

Unit

One endless stream of equal payments, valued at C divided by r

Recovery means

Not applicable

Measured by

Priced as a present value: the periodic payment divided by the discount rate, or by (r minus g) for a growing stream

In property law a perpetuity is a future interest in property that might take effect too far off in time, and the common-law rule against perpetuities voids any such interest. The classic statement, credited to John Chipman Gray and popularised in Leach's 1938 Perpetuities in a Nutshell, is that no interest is good unless it must vest, if at all, within twenty-one years after some life in being at the creation of the interest. The rule exists to stop an owner from controlling property forever from the grave by attaching conditions that could spring up in the distant future. This referent is a restriction on remote vesting, the near-opposite of something prized for lasting forever: it is not a cash-flow stream priced at C over r, nor a fund an institution decides to preserve permanently.[2]

Unit

One future interest, judged valid or void by whether it must vest in the perpetuity period

Recovery means

Not applicable

Measured by

Tested against the perpetuity period: a life in being plus twenty-one years, or a fixed number of years under reform statutes