Delayed Perpetuity

DEFINITION of 'Delayed Perpetuity'

A perpetual stream of cash flows that start at a predetermined date in the future. For example, preferred fixed dividend paying shares are often valued using a perpetuity formula. If the dividends are going to originate (start) 5 years from now, rather than next year, the stream of cash flows would be considered a delayed perpetuity.

BREAKING DOWN 'Delayed Perpetuity'

The net present value (NPV) of a delayed perpetuity is less than a comparable ordinary perpetuity because, based on time value of money principles, the payments have to be discounted to account for the delay. Retirement products are often structured as delayed perpetuities.

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