Delayed Perpetuity

AAA

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Perpetual Preferred Stock

    A type of preferred stock that has no maturity date. The issuers ...
  2. Preferred Stock

    A class of ownership in a corporation that has a higher claim ...
  3. Perpetuity

    A constant stream of identical cash flows with no end. The formula ...
  4. Dividend Discount Model - DDM

    A procedure for valuing the price of a stock by using predicted ...
  5. Present Value - PV

    The current worth of a future sum of money or stream of cash ...
  6. Living and Death Benefit Riders

    Living and death benefit riders are a descriptive class of contractual ...
Related Articles
  1. Retirement

    Borrowing From Your Retirement Plan

    Left with no alternative but to take money out from your retirement savings? Here are some guidelines.
  2. Retirement

    The 5% Solution To Financial Freedom

    How can you save the recommended 10% of your income? We'll show you how to get there.
  3. Savings

    Retire In Style

    Set your sights on the golden years and get there sooner.
  4. Retirement

    10 Bank-Breaking Money Myths

    Just because a belief is common, doesn't mean that it's true. Here we separate fact from fiction.
  5. Professionals

    Are Longevity Annuities in 401(k)s a Good Idea?

    An in depth look at the arrival of longevity annuities in 401(k)s and IRAs.
  6. Retirement

    How To Move From Nest Egg To Income?

    Income vs. a nest egg is closely tied to what most of us are ultimately interested in for retirement – maintaining our standard of living and to travel.
  7. Investing Basics

    Top Financial Planning Colleges: A Primer

    An overview of the top colleges for financial planners and advisors.
  8. Personal Finance

    First Resume? Tips For High School Students

    Here's how to shape your school projects, babysitting and any other jobs you've had into a resume that will get you hired.
  9. Budgeting

    Best Checking Accounts For College Students

    Student checking accounts avoid the high fees and minimum balances of some other accounts. Here's how to evaluate offers and find one with the best terms.
  10. Retirement

    Strategies To Build Your Retirement Portfolio

    Retirement indexes are designed to estimate how much an investor would need to have saved today to generate annual income in retirement, starting at 65.

You May Also Like

Hot Definitions
  1. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
  2. Market Value

    The price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization ...
  3. Preference Shares

    Company stock with dividends that are paid to shareholders before common stock dividends are paid out. In the event of a ...
  4. Accrued Interest

    1. A term used to describe an accrual accounting method when interest that is either payable or receivable has been recognized, ...
  5. Absorption Costing

    A managerial accounting cost method of expensing all costs associated with manufacturing a particular product. Absorption ...
  6. Currency Carry Trade

    A strategy in which an investor sells a certain currency with a relatively low interest rate and uses the funds to purchase ...
Trading Center