In the context of growing perpetuity, what does the term "C" represent?

In the context of growing perpetuity, the term "C" represents the constant payment amount, typically defined as the cash flow received at the end of each period. In a growing perpetuity model, this cash flow is not static but rather increases at a steady growth rate each period.

This concept is crucial because it demonstrates the idea that while the payments start at a set amount (C), they will continue to grow indefinitely at a specified annual growth rate. The formula for calculating the present value of a growing perpetuity incorporates this constant payment, along with the growth rate and the discount rate, thus reflecting the value of these future cash flows in today's terms.

Understanding the role of "C" in this context is essential in corporate finance, as it aids in valuing investments that generate regular cash flows that are expected to increase over time, which is common in many business scenarios.