Delayed Perpetuity

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.

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.


Investment dictionary. . 2012.

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