Chapter 5: Time Value Money part 2 Flashcards Preview

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Flashcards in Chapter 5: Time Value Money part 2 Deck (11):
1

what is a compound return also called

geometric return

2

what is the basis point

looking at a return down to its 1/100 of 1%

3

what is PVIF

a formula that determine the PV of $1 to be received at some time in the future n based on a given interest rate k

4

PVIF are always what (well most of the time)

less than 1 as long as the discount rates are positive - means that future dollars are usually worth less than the same dollars today

5

what are discount factors

are the reciprocals of their corresponding compound factors and vise versa (PVIF - 1/CVIF) - the greater the discount rate the greater the CVIF (and FV) and the smaller the PVIF (and PV) and vise versa

6

definition of annuity

regular payments on an investment that are for the same amount and are paid at the same interval

7

definition cash flows

the actual cash generated from an investment

8

definition ordinary annuity

equal payments that are made at the end of each period

9

PMT

for the regular annuity payment or receipt

10

 What type of annuity is this

 

Ordinary annuity

11

What type of annuity is this>?

Annuity due because it offers payments at the BEGINING of each period