Running Head: QUESTIONS
(PV) is the present value of money expected to make a certain value of return within a
certain period of time. (I) annual interest rate. INT; amount of interest earned within a given
period. FVN ; the future value of a payment after n period of time. PVAN ; refers to the
present value of annuity, n represents the amount of period for the payment of the annuity.
PMT; payment made within a fixed period of time. M; it denotes the number of interest
computed in the EAR equation per year. INOM; is the rate charged by financial institution.
Opportunity cost rate.
It is the amount of return generated by a certain amount of money when invested in an
alternative business with the same amount of risk (Chang, 2003).
Annuity; fixed amount of money paid within a year. Lump sum payment; payment made at
once without installments. Cash flow; Virtual money involved in business transactions.
Uneven cash flow stream; opposite of annuity, money paid without following a certain
Ordinary (or deferred) annuity; equal payments made after the elapsing of consecutive
payment period. Annuity due; repeating payments made for a certain period of time.
Perpetuity; bonds without maturity period. Consol; a debt without an expected return
without a certain period of time.
Outflow; money paid as a cost of operation. Inflow; money received from business
operations. Time line; a period of time when a certain payment is expected to be made.
Terminal value; value of business after estimating returns beyond the forecasted period.
Compounding; method used to determine the fu...
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