Match the terms relating to the basic terminology and concepts of the time value of money on the left with the descriptions of the terms on the right. Read each description carefully and type the letter of the description in the Answer column next to the correct term. These are not necessarily complete definitions, but there is only one possible answer for each term. Term Answer Description A concept that maintains that the owner of a cash flow will value it differently, depending Discounting A. on when it occurs. Time value of money B. Amortized loan C. 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). The process of determining the present value of a cash flow or series of cash flows to be received or paid in the future. A cash flow stream that is generated by a share of preferred stock that is expected to pay dividends every quarter indefinitely. Ordinary annuity D. Annual percentage rate E. Annuity due F. Perpetuity G. 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). An interest rate that reflects the return required by a lender and paid by a borrower, expressed as a percentage of the principal borrowed. 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. A loan in which the payments include interest as well as loan principal. A 6% return that you could have earned if you had made a particular investment. 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. Future value H. Amortization schedule I. Opportunity cost of funds J. 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? O PMT x {1 - [1/(1 + r)"]}/r O PMT/r O PMT x {[(1 + r)" - 1]/r} x (1 + r) O PMT x {[(1 + r)" - 1]/r}