Finance Ch 4
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The beginning value of an account or investment in a project is ___ value.
Present

The difference between a savings account's present value and its future value at the end of the period is due to the ___ earned during the period.
Interest

The process of finding present values is also called?
Discounting

The reverse process of discounting is?
Compounding

A series of payments of constant amount over a specified number of periods is called?
Annuity

Payments made on an annuity at the end of a period is call a ___ annuity.
Ordinary

Payments of an annuity due at the beginning of a period is called an annuity ___.
Due

The present value of an uneven stream of future payments is the ___ of the PV's of the individual payments.
Sum

The quoted interest rate is called ___ while the ___ annual interest rate is needed when compounding is involved.

The ___ ___ is one of the most important tools in time value calculations. It helps visualizing what is happening.
Time Line

An annuity that goes on forever is called?
Perpetuity

___ loans are paid off in equal installments over time.
Amortized

The breakdown of each loan payment as partly interest and partly principal is called?
Amortization Schedule

The ___ cost rate is the rate of return that could be earned on an alternative investment.
Opportunity

The term for equal cash flows coming in at regular intervals is called?
Payments

___ ___ is the term designated for uneven cash flows.
Cash Flow

The ___ annual rate is the rate that would have produced the same future value under annual compounding as would more frequent compounding at a given nominal rate.
Effective
[1 + (I_{nominal }/ M)]^{M}  1
M = number of compounding periods

The ___ percentage rate is the periodic rate times the number of periods per year.
Annual

The value of a business (or any assets or stock) is the ___ value of its expected future cash flows.
Present

The future value of an uneven cash flow stream is also know as its ___ value
Terminal

If a loan uses ___ compounding, then its nominal rate equals its effective rate.
Annual

___ time periods are used when payments occur within periods instead at either the beginning or end.
Fractional

A ___ ___ is defined as a series of payments that increase at a constant rate.
Growing Annuity