how is a perpetuity valued 
at first glance it may seem as though an instrument that offers an infinite stream of cash flows would be almost infinitely valuable but this is not the case mathematically speaking the value of a perpetuity is finite and its value can be determined by discounting its future cash flows to the present using a specified discount rate this procedure known as discounted cash flow dcf analysis is also widely used to value other types of securities such as stocks bonds and real estate investments 