Enhance Your Learning with Time Value of Money Flash Cards for quick understanding
The concept that money available today is worth more than the same amount in the future due to its potential earning capacity.
The current value of a future sum of money, taking into account the time value of money and potential interest or investment returns.
The value of an investment or sum of money at a specific point in the future, considering the effects of compounding or interest.
The percentage charged or earned on an amount of money, representing the cost of borrowing or the potential return on investment.
The process of earning interest on both the initial principal and the accumulated interest from previous periods.
The process of determining the present value of a future sum of money, taking into account the time value of money and potential interest or investment returns.
A series of equal cash flows or payments received or paid at regular intervals over a specified period of time.
An infinite series of equal cash flows or payments received or paid at regular intervals, continuing indefinitely.
The difference between the present value of cash inflows and the present value of cash outflows over a specific time period, used to evaluate the profitability of an investment or project.
The discount rate at which the net present value of an investment or project is equal to zero, indicating the rate of return on the investment.
Mathematical equations and formulas used to calculate present value, future value, interest rates, and other related concepts in time value of money calculations.
The frequency at which interest is added to the principal amount, such as annually, semi-annually, quarterly, or monthly.
The rate used to discount future cash flows to their present value, reflecting the time value of money and the risk associated with the investment or project.
The potential benefit or return that is given up or sacrificed when choosing one investment or course of action over another.
A multiplier used to calculate the future value of a present sum of money, taking into account the interest rate and compounding period.
A multiplier used to calculate the present value of a future sum of money, taking into account the interest rate and discounting period.
An annuity in which the cash flows or payments are made at the beginning of each period, rather than at the end.
A fund set up to accumulate money over time, usually through regular contributions, to meet a future financial obligation or goal.
The process of gradually reducing or paying off a debt or loan through regular payments, typically consisting of both principal and interest.
Interest that is calculated on both the initial principal and the accumulated interest from previous periods, resulting in exponential growth over time.
Interest that is calculated only on the initial principal amount, without taking into account any accumulated interest from previous periods.
The fixed amount of money received or paid at regular intervals as part of an annuity.
A mathematical equation used to calculate the present value, future value, or payment amount of an annuity, based on the interest rate and number of periods.
The length of time over which an investment or financial plan is expected to be held or implemented, influencing the time value of money calculations.
The theoretical rate of return on an investment with no risk, often used as a benchmark for comparing the performance of other investments.
The rate at which the general level of prices for goods and services is rising, eroding the purchasing power of money over time.
The return that could have been earned on an alternative investment of equal risk, used as a discount rate in time value of money calculations.
The additional return or compensation required by an investor for taking on additional risk compared to a risk-free investment.
A valuation method used to determine the present value of expected future cash flows, taking into account the time value of money.
The process of evaluating and selecting long-term investment projects or expenditures, considering their potential cash flows and the time value of money.
Pre-calculated tables or charts used to find the present value or future value of a sum of money, based on different interest rates and time periods.
The length of time required to recover the initial investment in a project or investment, taking into account the time value of money and discounted cash flows.
A financial model used to determine the expected return on an investment, taking into account the risk-free rate, market risk premium, and beta of the investment.
A discount rate that incorporates the level of risk associated with an investment or project, reflecting the additional return required by investors for taking on higher risk.
The practical use and application of time value of money concepts in various financial decisions, such as investment analysis, loan pricing, and retirement planning.
The number of compounding periods within a given time period, such as annually, semi-annually, quarterly, monthly, or daily.
The number of discounting periods within a given time period, such as annually, semi-annually, quarterly, monthly, or daily.
The underlying assumptions and principles used in time value of money calculations, including the consistency of cash flows, constant interest rates, and rational decision-making.
The current value of a series of equal cash flows or payments received or paid at regular intervals over a specified period of time, taking into account the time value of money.
The value of a series of equal cash flows or payments at a specific point in the future, considering the effects of compounding or interest, taking into account the time value of money.
The process of gradually reducing or paying off a loan through regular payments, typically consisting of both principal and interest, over a specified period of time.
The current value of an infinite series of equal cash flows or payments received or paid at regular intervals, continuing indefinitely, taking into account the time value of money.
The value of an infinite series of equal cash flows or payments at a specific point in the future, continuing indefinitely, considering the effects of compounding or interest, taking into account the time value of money.
A tool or software used to perform time value of money calculations, such as present value, future value, interest rates, and annuities, based on user inputs.
A method used to evaluate the financial feasibility of an investment or project by discounting the expected future cash flows to their present value, taking into account the time value of money.
The application of time value of money concepts in personal financial decisions, such as saving for retirement, budgeting, and evaluating loan options.
The application of time value of money concepts in business financial decisions, such as capital budgeting, investment analysis, and financial planning.
The application of time value of money concepts in real estate investment and financing decisions, such as property valuation, mortgage calculations, and rental cash flow analysis.
The use of time value of money concepts in evaluating investment opportunities, calculating expected returns, and assessing the risk and profitability of different investment options.
The consideration of time value of money principles in retirement planning, such as determining the required savings, estimating future expenses, and evaluating investment strategies.
The incorporation of time value of money concepts in determining the interest rates, loan terms, and repayment schedules for loans, taking into account the risk and profitability of the lending institution.
The use of time value of money principles in making informed financial decisions, considering the potential impact of interest rates, inflation, and the time horizon on the value of money over time.