Description Term A series of equal cash flows that occur at the end of each of the equally spaced intervals (such as daily, monthly, quarterly, and so on) Future value Amortization schedule (table) A rate that represents the return on an investor's best available alternative investment of equal risk > Amortized loan Annual percentage rate 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 Annuity due A loan in which the payments include interest as well as loan principal Discounting KK Future value A value that represents the interest paid by borrowers or earned by lenders, expressed as a percentage of the amount borrowed or invested over a 12-month period > Opportunity cost of funds Ordinary annuity 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 Time value of money 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 A series of equal (constant) cash flows (receipts or payments) that are expected to continue forever The process of determining the present value of a cash flow or series of cash flows to be received or paid in the future 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 - [1 / (1 + r)" ]} /r PMT/r PMT {[(1 + r)" - 1] /r} PMT x {[(1 + r)" - 1] /r} x (1 + r)