Term Answer Discounting A A. Time value of money B. Amortized loan C. Ordinary annuity D. Annual percentage rate E. Description A process that involves calculating the current value of a future cash flow or series of cash flows based on a certain interest rate. A series of equal (constant) cash flows (receipts or payments) that are expected to continue forever. 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). 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 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. 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. A type of security that is frequently used in mortgages and requires that the loan payment contain both interest and loan principal. 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. A 5% 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. Annuity due F. Perpetuity G. Future value H. I. Amortization schedule 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 future value of an ordinary annuity? PMT x {[(1 + r)" - 1]/r} x(1 + r) PMT X {1 - [1/(1 + r)"]}/r PMT X {[(1 + r) - 1]/r} FV/(1 + r)