Assuming 0 growth the formula for calculating the present value of a perpetuity is: annual cashflow / discount rate = present value So based on your numbers, t

Assuming 0 growth the formula for calculating the present value of a perpetuity is: annual cashflow / discount rate = present value So based on your numbers, the discount rate is 5.6%. For personal investments, the discount rate is often used is the rate of return that could be obtained from other investments. If we look at stocks (s&p500) around 7% post-inflation return historically, using that as the discount rate, the present value is $114,253 / 7% = $1.6m. That is to say 2.1M is better off in the stock market than buying this, if you assume 7% returns on average. EDIT: Actually if you assume this tracks inflation (not sure if this is true) and payout grows 2% per year, the discount rate is closer to 7.5%. The formula including growth: http://news.morningstar.com/classroom2/course.asp?docId=145102&page=5 http://news.morningstar.com/classroom2/course.asp?docId=1451...