Finance, or financial management, requires the knowledge and precise use of the language of the field. Match the terms relating to the basic terminology and concepts of the time value of money on the left with the descriptions of the terms on the right. Read each description carefully and type the letter of the description in the Answer column next to the correct term. These are not necessarily complete definitions, but there is only one possible answer for each term. Term Answer Description Discounting A. The process of determining the present value of a cash flow or series of cash flows to be received or paid in the future. Time value of B. A series of equal (constant) cash flows (receipts or money payments) that are expected to continue forever. Amortized loan C. 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. Ordinary D. The concept that states that the timing of the receipt or annuity payment of a cash flow will affect its value to the holder of the cash flow. Annual E. A schedule or table that reports the amount of principal percentage rate and the amount of interest that make up each payment made to repay a loan by the end of its regular term. Annuity due F. 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. Perpetuity G. A loan in which the payments include interest as well as loan principal. Future value H. A series of equal cash flows that occur at the beginning of each of the equally spaced intervals (such as daily, monthly, quarterly, and so on). Amortization 1. A 6% return that you could have earned if you had made schedule a particular investment. Opportunity J. An interest rate that reflects the return required by a cost of funds lender and paid by a borrower, expressed as a percentage of the principal borrowed. 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 present value of an annuity due? PMT x ({1 - [1/(1 + r)on]}/r) C PMT x {[(1 + r)nn - 1]/r} x (1 + r) C PMT x ({1 - [1/(1 + r)nn]}/r) x (1 + r) PMT / r