Ch 05-Assignment - Time Value of Money \begin{tabular}{ll} Term & Answer Desciption \\ \hline Discounting & A. A cash flow stream that is gested by an investruent or loan that requires its cash fows to \end{tabular} Time value of money Amortized loan Ordinary annuity D. A type of security that is frequentiy used in mortgages and requiren that the loais payment Anual peroentage rate Annual percentage rate E. An interest rate that reflects the return required by a lender and paid by a borrower, expressed as a percentage of the prindpal borrowed. Annuity due F. A series of equal cash flows that occur at the beginning of each of the equally spaced intervals (such as daily, monthly, quarterly, and so on). Perpetuity G. A concept that maintains that the owner of a cash flow will value it differently, depending on when it occurs. Future value H. A cash flow stream that is generated by a share of preferred stock that is expected to pay dividends every quarter indefinitely. Amortization schedule L. The process of determining the present value of a cash flow or series of cash flows to be received or paid in the future. Opportunity cost of funds 3. One of the four major time value of money terms; the amount to which an individual cash flow or series of cash payments or receipts will grow over a period of time when earning interest 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 annuity due? PMT/r PMT {[(1+r)n1]/r}(1+r) PMT ({1[1/(1+r)n]}/r)(1+r) PMT ({1[1/(1+r)n]}/r)