Definition of Deferred Annuity
A deferred annuity is an annuity that starts after at least one period after the initial investment. Normally the projected cash flows in a project assume that the cash inflows will start in the first period after the initial investment. But this might not be the case always. The cash inflows may start after a delay of a few periods.
Assume a project that has an initial outlay of $50,000 and it will start generating $16,000 for the next 10 years starting five years from now. This is a deferred or delayed annuity.
View More Financial Management Definitions
Related Questions of Deferred Annuity
Highland Mining and Minerals Co. is considering the purchase of two
Calculate the present value of each of the following cash flows at
Explain how a deferred annuity works as a tax shelter. How
The first of 10 semiannual payments of $2000 will be made
Using an inheritance he recently received, Sam wants to purchase a
Mr. Donatelli moved from Toronto to Winnipeg to take a job
An investor purchased a deferred annuity contract for $4608.07
A deferred annuity consists of an ordinary annuity paying $2000 semiannually
1. How long is the period of deferral if the first
For the same n, PMT, and i, is the
Show All
