Term Answer Discounting A. Time value of money B. Amortized loan C. Ordinary annuity D. Annual percentage rate E. Description A cash flow stream that is generated by a share of preferred stock that is expected to pay dividends every quarter indefinitely. 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 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). 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 loan in which the payments include interest as well as 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. A process that involves calculating the current value of a future cash flow or series of cash flows based on a certain interest rate. F. Annuity due Perpetuity G. 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 future value of an annuity due? O PMT x {[(1 + r)" - 1]/r} x (1 + r) PMT x {[(1 + r)" - 1]/r) OFV/(1 + r)" O PMT x({1 - [1/(1 + r)"]}/r) x (1 + r)