Term Answer Discounting A. Description A series of equal (constant) cash flows (receipts or payments) that are expected to continue forever. Time value of money B. Amortized loan F C. A D. Ordinary annuity Annual percentage rate E. Annuity due F. 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 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 6% return that you could have earned if you had made a particular investment. 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. A type of security that is frequently used in mortgages and requires that the loan payment contain both interest and loan principal. A value that represents the interest paid by borrowers or earned by lenders, expressed as a percentage of the amount borrowed or invested over a 12-month period. A concept that maintains that the owner of a cash flow will value it differently, depending on when it occurs. 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. The process of determining the present value of a cash flow or series of cash flows to be received or paid in the future. Perpetuity G. Future value I H. Amortization schedule E I. Opportunity cost of funds ). 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? FV/(1 + r)" O PMT X{[(1 + r)" - 1]/r} x (1 + r) PMT X ({1 - [1/(1 + r)"]}/r) x (1 + r) O PMT x {[(1 + r)" - 1]/r}