Using Time Value of Money Tables definitions Flashcards
Using Time Value of Money Tables definitions
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Present Value Current worth of a future sum or series of payments, discounted using a specific interest rate and number of periods. Annuity Series of equal payments made at regular intervals, such as annual or semiannual bond interest payments. Lump Sum Single payment made at a specific time, often representing the principal repaid at bond maturity. Present Value Table Chart listing factors used to quickly determine the present value of future lump sums or annuities. Present Value Factor Multiplier from a table applied to a future value or payment to calculate its present value. Interest Rate Percentage used to discount future payments to present value, represented as 'r' in calculations. Number of Periods Total count of time intervals, such as years or half-years, over which payments or discounting occur. Ordinary Annuity Annuity where payments are made at the end of each period, commonly used in bond interest calculations. Stated Interest Rate Rate printed on a bond, used to determine the actual cash interest payments to bondholders. Market Interest Rate Prevailing rate in the market, used to assess the attractiveness and value of a bond. Semiannual Interest Interest paid twice a year, requiring adjustments to both the interest rate and number of periods. Future Value Amount of money to be received or paid at a later date, before discounting to present value. Bond Principal Face value of a bond repaid as a lump sum at maturity, separate from periodic interest payments. Cash Flow Stream Sequence of payments, such as interest and principal, associated with financial instruments like bonds. Discounting Process of determining present value by applying a rate to reduce future sums to their current worth.