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
Discounting		A.	A cash flow stream that is generated by a share of preferred stock that is expected to pay dividends every quarter indefinitely.
Time value of money		B.	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.
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 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		F.	A 6% return that you could have earned if you had made a particular investment.
Perpetuity		G.	A type of security that is frequently used in mortgages and requires that the loan payment contain both interest and loan principal.
Future value		H.	The process of determining the present value of a cash flow or series of cash flows to be received or paid in the future.
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 annuity due?

PMT x ({1 [1/(1 + r)nn]}/r) x (1 + r)

PMT x {[(1 + r)nn 1]/r}

PMT x {[(1 + r)nn 1]/r} x (1 + r)

FV/(1 + r)n