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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.