• Shuffle
Toggle On
Toggle Off
• Alphabetize
Toggle On
Toggle Off
• Front First
Toggle On
Toggle Off
• Both Sides
Toggle On
Toggle Off
Toggle On
Toggle Off
Front

### How to study your flashcards.

Right/Left arrow keys: Navigate between flashcards.right arrow keyleft arrow key

Up/Down arrow keys: Flip the card between the front and back.down keyup key

H key: Show hint (3rd side).h key

A key: Read text to speech.a key

Play button

Play button

Progress

1/25

Click to flip

### 25 Cards in this Set

• Front
• Back
 Time Line An important tool used in the time value analysis; it is a graphical representation used to show the timing of cash flows. Furture Value The amount to which a cash flow or series of cash flows will grow over a given period of time when compunded at a given interest rate. Present Value The value today of a future cash flow or series of cash flows. Compounding The arithmetic process of determining the final value of a cash flow or series of cash flows when compunded interest is applied. Compund Interest Occurs when interest earned on prior period's interest. Simple Interest Occurs when interest is not earned on interest. Opportunity Cost The rate of return you could earn on an alternative investment of similar risk. Discounting The process of finding the present value of a cash flow or a serioes of cash flows; discounting is the reverse of compounding. Annuity A series of equal payments at fixed intervals for specified number of periods. Ordinary (Deferred) Annuity An annuity whose payments occur at the end of each period. Annuity Due An annuity whose payments occur at the beginning of each period. FVA subscript n The future of annuity over N periods. PVA subscript n The present value of an annuity of N periods. Consol A perpetual bond issued by the British government to consolidate debts; in general, any perpetual bond. Perpetuity A stream of equal payments at fixed intervals expected to continue forever. Uneven (Nonconstant) Cash Flows A series of cash flows where the amount varies from one period to the next. Payment (PMT) This term designates equal cahs flows coming in regular intervals. Cash Flow (CFt) This term designates a cash flow that's not part of an annuity. Annual Compounding The arithmetic process of determining the final value of a cash flow or series of cash flows when interest is added once a year. Semiannual Compounding The arithmetic process of determining the final value of a cash flow or series of cash flows when interest is added twice a year. Nomial (Quoted or stated) Interest Rate, Inom The contracted or quoted, or stated interest rate. Annual Percentage Rate (APR) The periodic rate times the number of periods per year. Effective (Equivalent) Annual Rate (EEF% or EAR) The annual rate of interest actually being earnedd, as opposed to the quoted rate. Also called the "equivalent annual rate". Amortized Loan A loan that is repaid in equal payments over its life. Amortization Schedule A table showing precisely how a loan will be repaid. It gives the required payment on each payment date and a breakdown of te payment, showing how much interest is repayment of principal.