A perpetual annuity is a constant income stream made up of regularly recurring, identical payments which are paid out to a recipient from a lump sum of capital (the principal) for an unlimited amount of time without reducing or increasing the amount of capital making up the principal.
To put it in simpler term, a perpetual annuity is a regular, constant income stream paid out for an unlimited amount of time.
This is possible because the recurring annuities paid out from the principal are identical to the returns earned through the investment of the principal. You can use the interactive perpetual annuity calculator to better understand how perpetual annuities work.
Important: The term perpetual annuity is used in a broader sense to include annuities which are paid out for an unlimited amount of time, but at irregular intervals and in variable amounts.
Perpetual annuity calculator