Description Term Discounting A. A series of equal (constant) cash flows (receipts or payments) that are expected to continue forever. Time value of money B. 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. Amortized loan C. An interest rate that reflects the return required by a lender and paid by a borrower, expressed as a percentage of the principal borrowed. Ordinary annuity D. 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. Annual percentage rate E. A table that reports the results of the disaggregation of each payment on an amortized loan, such as a mortgage, into its interest and loan repayment components. Annuity due F. A rate that represents the return on an investor's best available alternative investment of equal risk. Perpetuity G. A loan in which the payments include interest as well as loan principal. Future value H. A process that involves calculating the current value of a future cash flow or series of cash flows based on a certain interest rate. Amortization schedule I. 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. Opportunity cost of funds J. 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 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 future value of an ordinary annuity? O FV/(1 + r) O PMT x {[(1 + r) - 1]/r} O PMT x {[(1 + r) 1]/r} x (1 + r) PMT x {1 - [1/(1 + r)"]}/r Answer H J G IV A