| A | B |
|---|
| Annual Compounding | The arithmetic process of determining the final value of a cash flow or series of cash flows when interest is added once a year |
| Annuity | A series of payments of an equal amount at fixed intervals for a specified number of periods. |
| Annuity Due | An annuity whose payments occur at the beginning of each period. |
| Amortized Loan | A loan that is repaid in equal payments over its life. |
| Discounting | The process of finding the present value of a cash flow or a series of cash flows; discounting is the reverse of compounding. |
| Future Value | The process of finding the present value of a cash flow or a series of cash flows; discounting is the reverse of compounding. |
| Opportunity Cost | The return on the best alternative use of an asset, or the highest return that will not be earned if funds are invested in a particular project. |
| Perpetuity | A stream of equal payments expected to continue forever. |
| Present Value | The value today of a future cash flow or series of cash flows. |
| Time Line | An important tool used in time value of money analysis; it is a graphical representation used to show the timing of cash flows. |
| Uneven Cash Flow Stream | A series of cash flows in which the amount varies from one period to the next |
