Term Discounting Time value of money Amortized loan Ordinary annuity Annual percentage rate Annuity due Perpetuity Future value Amortization schedule Opportunity cost of funds Answer | ▸ Description A. A concept that maintains that the owner of a cash flow will value it differently, depending on when it occurs. B. 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. C. The process of determining the present value of a cash flow or series of cash flows to be received or paid in the future. D. A series of equal (constant) cash flows (receipts or payments) that are expected to continue forever. E. 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. F. An interest rate that reflects the return required by a lender and paid by a borrower, expressed as a percentage of the principal borrowed. G. 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. H. A type of security that is frequently used in mortgages and requires that the loan payment contain both interest and loan principal. I. A rate that represents the return on an investor's best available alternative investment of equal risk. J. 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. 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? FV/(1 + r)" PMT x {[(1 + r) - 1]/r} x (1 + r) PMT x {1 - [1/(1+r)"]}/r PMT x {[(1 + r)" - 1]/r}
Term Discounting Time value of money Amortized loan Ordinary annuity Annual percentage rate Annuity due Perpetuity Future value Amortization schedule Opportunity cost of funds Answer | ▸ Description A. A concept that maintains that the owner of a cash flow will value it differently, depending on when it occurs. B. 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. C. The process of determining the present value of a cash flow or series of cash flows to be received or paid in the future. D. A series of equal (constant) cash flows (receipts or payments) that are expected to continue forever. E. 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. F. An interest rate that reflects the return required by a lender and paid by a borrower, expressed as a percentage of the principal borrowed. G. 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. H. A type of security that is frequently used in mortgages and requires that the loan payment contain both interest and loan principal. I. A rate that represents the return on an investor's best available alternative investment of equal risk. J. 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. 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? FV/(1 + r)" PMT x {[(1 + r) - 1]/r} x (1 + r) PMT x {1 - [1/(1+r)"]}/r PMT x {[(1 + r)" - 1]/r}
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Solve this practice problem
![Term
Discounting
Time value of money
Amortized loan
Ordinary annuity
Annual percentage rate
Annuity due
Perpetuity
Future value
Amortization schedule
Opportunity cost of funds
Answer
A.
B.
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.
The process of determining the present value of a cash flow or series of cash flows to be
received or paid in the future.
C.
D.
A series of equal (constant) cash flows (receipts or payments) that are expected to
continue forever.
E.
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.
An interest rate that reflects the return required by a lender and paid by a borrower,
expressed as a percentage of the principal borrowed.
F.
Description
A concept that maintains that the owner of a cash flow will value it differently, depending
on when it occurs.
G.
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.
H.
A type of security that is frequently used in mortgages and requires that the loan payment
contain both interest and loan principal.
A rate that represents the return on an investor's best available alternative investment of
equal risk.
I.
J.
O FV/(1 + r)¹
O PMT x {[(1 + r)ª − 1]/r} x (1 + r)
O PMT x {1 [1/(1+r)"]}/r
O PMT x {[(1 + r)" - 1]/r}
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.
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?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Faf434c73-38f1-4a89-b981-edd99d760c82%2F5f84297d-a6d1-4e3c-8aeb-95f8384192a2%2Fzeknr18_processed.png&w=3840&q=75)
Transcribed Image Text:Term
Discounting
Time value of money
Amortized loan
Ordinary annuity
Annual percentage rate
Annuity due
Perpetuity
Future value
Amortization schedule
Opportunity cost of funds
Answer
A.
B.
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.
The process of determining the present value of a cash flow or series of cash flows to be
received or paid in the future.
C.
D.
A series of equal (constant) cash flows (receipts or payments) that are expected to
continue forever.
E.
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.
An interest rate that reflects the return required by a lender and paid by a borrower,
expressed as a percentage of the principal borrowed.
F.
Description
A concept that maintains that the owner of a cash flow will value it differently, depending
on when it occurs.
G.
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.
H.
A type of security that is frequently used in mortgages and requires that the loan payment
contain both interest and loan principal.
A rate that represents the return on an investor's best available alternative investment of
equal risk.
I.
J.
O FV/(1 + r)¹
O PMT x {[(1 + r)ª − 1]/r} x (1 + r)
O PMT x {1 [1/(1+r)"]}/r
O PMT x {[(1 + r)" - 1]/r}
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.
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?
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