| A | B |
|---|
| future value | value in the future of a deposit today |
| compound interest | interest earned on interest |
| principal | amount of money on which interest is paid |
| present value | current value of a future amount |
| discounting cash flows | inverse of compound interst |
| annuity | stream of equal periodic cash flows |
| ordinary annuity | cash flow occurs at end of period |
| annuity due | cash flow occurs at beginning of period |
| perpetuity | annuity with infinite life |
| mixed stream | unequal periodic cassh flows |
| continuous compounding | compounding interest all the time |
| quarterly compounding | compounding interest over four periods yearly |
| effective annual rate | reflects effects of compounding |
| nominal annual rate | contractual interest rate |
| loan amortization | determination of equal periodic loan payments |
