Finance, or financial management, requires the knowledge and precise use of the language of the field. Match the terms relating to the basic terminology and concepts of the time value of money on the left with the descriptions of the terms on the right. Read each description carefully and type the letter of the description in the Answer column next to the correct term. These are not necessarily complete definitions, but there is only one possible answer for each term. A. A cash flow stream that ls 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 far 10 years Time value of money Amortized loanC
B. A 6% return that you could have earned if you had made a particular investment
C. A table that reports the results of the d saggregaton of each payment on an amortized loan, such as a mortgage, into its interest and loan Ordinary annuity
D. A loan in which the payments include interest as well as loan principal 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 series of equal cash flow's that occur at the beginning of each of the equaly spaced intervals (such as daily, monthly, quarterly, and so on) The concept that states that the timing of the receipt or payment of a Annual percentage rate
E. A loan in which the payments include interest as well as loan principal rate Annuity due
F. A process that involves calculating the current value of a future cash flow or series of cash flows based on a certain interest rate Perpetuity
G. 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 Future value
H. 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 Amortization
I. A 6% return that you could have earned if you had made a particular schedule investment Opportunity cost of
J. One of the four major time value of money terms; the amount to which funds 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 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?
A. PMT*({1-[1/(1+r)n]}/r)*(1+r)
B. PMT*{[(1+r)n-1]/r}(1+r)
C. PMT*{[(1+r)n-1]/r}
D. Fv/(1+r)n