Term
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Definition
| loss of purchasing power that occurs over time as a result of inflation |
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Term
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Definition
| increase in average prices over time |
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Term
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Definition
| amount of interest earned on a principal amount stated |
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Term
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Definition
| base amount that we borrow or save |
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Term
| Fixed principal commercial loans |
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Definition
| Fixed payment of principle that remains constant for the life of the loan |
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Term
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Definition
| loan that a homeowner or business owner obtains when they want to move to a more expensive property, but have not sold the current property |
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Term
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Definition
| amount of interest deducted from the amount you wish to borrow |
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Term
| Effective annual interest rate |
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Definition
| actual interest rate paid, taking into account the cost of the money borrowed and the actual amount of money used |
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Term
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Definition
| interest earned on both the principle amount and the accrued interest that has been previously earned |
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Term
| internal rate of return (IRR) |
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Definition
| actual rate of return on an investment that takes into consideration the time-value of money |
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Term
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Definition
| stream of the same payments paid or received over time |
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Term
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Definition
| putting money into something consistently |
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Term
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Definition
| taking in money consistently |
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Term
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Definition
| The same payments are made or received at the end of each time period |
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Term
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Definition
| Same payments are made or received in the beginning of a time period |
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Term
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Definition
| Reduction of the loan balance by applying each month's principal payment |
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Term
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Definition
| method used to justify the acquisition of capital goods |
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Term
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Definition
| number of years that it takes a business to get back the money that it invested in a project or asset. |
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Term
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Definition
| method of capital budgeting that uses the time-value of money by discounting future benefits and costs back to the present |
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Term
Weighted average cost of capital
(WACC) |
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Definition
| Multiplies the cost of debt (rate that lender charges) by its proportion of total funds raised, then multiplying the cost of equity (opportunity cost to the owner) by its proportion of total funds raised |
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