Term
| The Value of any asset is determined by |
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Definition
| the size of its future cash flow, the riskiness of its cash flow, and the timing of its cash flow. |
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Term
| The concept of Time Value Money |
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Definition
| Based on the belief that a dollar today is worth more than dollar to be received at some future date. |
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Term
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Definition
| The process of finding some future value of a present amount. |
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Term
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Definition
| The process of finding the present value of some future amount. |
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Term
Four different types of
Cash Flow |
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Definition
- Single Amount
- Annuity
- Mixed Stream
- Perpetuity
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Term
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Definition
| This is a lump-sum amount either currently held or expected at some future date. |
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Term
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Definition
| This is a set level of cash flows occurring each time period for a fixed length of time. |
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Term
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Definition
| This is a stream of unequal periodic cash flows that represent no particular pattern. |
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Definition
| This is a set level of cash flows occurring each time period forever. |
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Term
| Future value of single amount |
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Definition
The amount an investment is worth after one or more periods of time is its future value.
To determine the future value of a single amount, this is simply the sum of a single amount of cash flow is worth after one or more periods of time in the future. |
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Term
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Definition
| Interest earned both on the initial principal and the amount of interest reinvested from prior periods. |
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Term
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Definition
| The interest earned each year is based only on the original principal amount invested. |
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Term
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Definition
| Annuities where the payments occur at the end of each time period. |
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Term
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Definition
| Refer to annuity streams where the payments occur at the beginning of each time period. |
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Term
| Future cash flow of annuity formula |
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Definition
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