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29 Cards in this Set
- Front
- Back
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Time Values |
There are 6 time value calculations. Future Value of 1; Future Value of 1 per period; Future Value of 1 Increasing per period; Present Value of 1; Present Value of 1 per period; Present Value of 1 Increasing per period |
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Future Value of 1 |
Calculate how much an investment is worth in the future using PV invested at an interest rate of return compounded over a number of years/periods. |
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Future Value of 1 per period / future Value of an annuity |
Calculate future Value using the annuity or amount per period with an interest rate of return compounded over a number of years. |
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Future Value of 1 Increasing per period |
Calculate future Value of an annuity using the initial annuity amount with an interest rate of return and growth rate of annuity per period compounded over a number of years |
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Present Value of 1 |
Calculate the present value of a right to receive an inheritance in a number of years with a fixed discount/compound rate |
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Present Value of 1 per period |
Calculate the present value of the right to receive an annuity (fixed amount/period) with a fixed discount rate over a number of years. |
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Present Value of 1 Increasing per period |
Calculate the present value of a growing annuity. |
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Investment Values |
Net Present Value (NPV) and Net Future Value (NFV) |
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Net Present Value (NPV) |
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Net Future Value (NFV) |
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Internal rate of return (IRR) |
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2 drawbacks to exclusive use of IRR |
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Effective Rate of Return (ERR) |
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Net interest cost |
The after tax interest expense required to service the debt. The net interest cost takes not only interest expense into account but also measures the effect of the tax savings attributable to the deductibility if any of the interests for income tax purposes |
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Opportunity cost |
The after tax investment return for gone by committing funds to an alternative purpose |
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Calculating federal income tax liability |
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Calculating net worth |
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Cash flow |
cash flow represents the amount available for investment purposes or discretionary spending purposes after taking into account sources of income reduced by tax liabilities living expenses debt payments and investment-related expenditures |
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Income - cash flow mgmt |
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Tax liabilities |
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Expenses |
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Investment or savings related expenditures |
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Residential loans |
Two types: fixed rate and adjustable rate mortgage. |
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Types of life insurance |
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Adjustable life insurance |
A first generation universal life policy where the policy owner can change the amount paid into the policy but normally must submit a written or online request to the insurance company to do so |
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Interest sensitive whole life insurance |
Combines the fixed face amount and fixed premium level features of whole life insurance with a fixed income type of investment. As interest rates change the policies cash value changes. |
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Equity indexed life insurance |
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Single premium life insurance |
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Second to die policy |
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