Delayed Annuity

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DEFINITION of 'Delayed Annuity'

An annuity in which the first payment is paid at a later date in the future. A delayed annuity, similar to a regular annuity consists of a stream of cash flows provided to the annuity holder. However, cash payments do not begin to flow immediately, instead following a predetermined future schedule.

BREAKING DOWN 'Delayed Annuity'

If Steve was to receive five yearly payments of $100 at the end of each year starting this year, then this payout would be considered an ordinary annuity. On the other hand, if the five payments are deferred for 10 years, this instrument is classified as a delayed annuity. In order to determine the net present value of the delayed annuity, the payments must be discounted to year zero (the present).