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31 Cards in this Set
- Front
- Back
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When you want to find out what some cash flows are going to be worth some time in the future, after interest has accumulated, what would you use?
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FV
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When you want to find the actual value of some cash flows, to find what the future cash flows would be worth if they were discounted back to today, what would you use?
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PV
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When you're trying to find a payment that will be due on a loan of some sort, what would you use?
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PMT
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The _____ argument in the PMT function designates when the payments are made.
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type
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T/F...The "values" argument in the formula =IRR(values,guess) is a list of positive and negative cash flows.
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True
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Payments made at the beginning of each period are indicated by a Payment_type of _____.
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1
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The _____ argument of the PMT function refers to the value at the end of the transaction.
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fv
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Adding interest earned each period to the principal and then computing interest for the next period is _____ interest.
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compound
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The default type of _____ indicates payments are made at the end of each period.
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0
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When using the PMT function, the argument which refers to the number of periods is _____.
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nper
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The _____ is the time it will take to earn sufficient profits so that the loan can be repaid.
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payback period
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Cash received is considered a _____ cash flow.
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positive
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When calculating taxes in the United States, a company can expense or subtract from income only the _____ portion of a loan payment.
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interest
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_____ is the process by which a company spreads the expense of an asset over its useful life.
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Depreciation
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T/F...In the Unites States, a company can deduct only the amount paid towards interest as an expense
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True
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_____ is the sum of the cash flows, excluding the initial investment, divided by the investment value
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ROI
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Cash paid out in a transaction is considered the _____ cash flow.
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negative
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The equivalent yearly simple interest rate that takes into account compounding is the _____.
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annual percentage yield (APY)
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To show a down payment toward the purchase of an asset, you must adjust the _____ of the loan.
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pv
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The _____ argument of the PMT function refers to the original principal value at the beginning of the transaction.
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pv
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A_____ is additional money required from the borrower at the end of a loan.
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balloon payment
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When using the PV and FV formulas, what should you add at the end to find the present or future value?
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PV or FV depending on question at hand
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____ is when you add interest earned each period to the principal and then use that value to compute interest for the next period?
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compound
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To show a down payment toward the purchase of an asset, you must adjust the _____ of the loan.
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pv
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When making loan payments, as the principal owed on the loan is slowly lowered, a larger proportion of the payment amount goes to reducing the prinicipal owed.
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TRUE
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The _____ argument in the PMT function designates when the payments are made.
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type
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the payment type does not affect lump sum amounts...it only applies to periodic payments (located in the PMT box).
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TRUE
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In order to calculate the Future Value of stream of monthly cash flows which start immediately, and also include an additional lump sum at the beginning of the transaction, the PMT argument should equal the Lump Sum amount plus the monthly payment amount.
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FALSE
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256) In the Unites States, a company can deduct only the amount paid towards interest as an expense (whch effectively reduces the amount of income taxed)
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TRUE
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How do you determine the Rate for a PMT function?
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(annual percentage rate/pmts per year)
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How do you calculate the Nper for a PMT function?
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(# of years * pmts per year)
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