Answer A Term Description Discounting A. The concept that states that the timing of the receipt or payment of a cash flow will affect its value to the holder of the cash flow. Time value of money B. A cash flow stream that is created by a lease that requires the payment to be paid on the first of each month and a lease period of three years. Amortized loan C. The process of determining the present value of a cash flow or series of cash flows to be received or paid in the future. Ordinary annuity D. A series of equal (constant) cash flows (receipts or payments) that are expected to continue forever. Annual percentage rate E. A cash flow stream that is created by an investment or loan that requires its cash flows to take place on the last day of each quarter and requires that it last for 10 years. Annuity due F. An interest rate that reflects the return required by a lender and paid by a borrower, expressed as a percentage of the principal borrowed. Perpetuity G. A schedule or table that reports the amount of principal and the amount of interest that make up each payment made to repay a loan by the end of its regular term. Future value H. A loan in which the payments include interest as well as loan principal. Amortization schedule I. A 6% return that you could have earned if you had made a particular investment. Opportunity cost of funds J. The name given to the amount to which a cash flow, or a series of cash flows, will grow over a given period of time when compounded at a given rate of interest. Time value of money calculations can be solved using a mathematical equation, a financial calculator, or a spreadsheet. Which of the following equations can be used to solve for the present value of an ordinary annuity? PMT x {[(1 + r) - 1]/r} x (1 + r) PMT x {[(1 + r)" - 1]/r} PMT/r O PMT x {1 [1/(1+r)"]}/r B D