Term Answer Description Discounting A. 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. A process that involves calculating the current value of a future cash flow or series of cash flows based on a certain interest rate. Time value of money B. Amortized loan C. Ordinary annuity D. Annual percentage rate E. A 6% return that you could have earned if you had made a particular investment. 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 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. 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. Annuity due F. Perpetuity G. A series of equal (constant) cash flows (receipts or payments) that are expected to continue forever. Future value H. Amortization schedule I. 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 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. A loan in which the payments include interest as well as loan principal. 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 equ can be used to solve for the future value of an ordinary annuity? O PMT x {[(1 + r)" - 1]/r} PMT x {[(1 + r)" - 1]/r} x (1 + r) OFV/(1 + r)" O PMT x {1 - [1/(1 + r)"]}/r