B A 323 Chapter Notes - Chapter 5: Cash Flow, Opportunity Cost
Document Summary
Time line - helps you visualize what s happening in a particularly problem. Essential when you are first learning time value concepts. Future value (fv) - amount to which a cash flow or series of cash flows will grow over a given period of time when compounded at a given interest rate. Present value (pv) - value today of a future cash flow or series of cash flows. Compounding - arithmetic process of determining the final value of a cash flow or series of cash flows when compound interest is applied. Opportunity cost - rate of return you could earn on an alternative investment of a similar risk. Discounting - process of finding the present value of a cash flow or a series of a cash flow. Annuity - series of equal payments at fixed intervals for a specified number of periods. Ordinary (deferred) annuity - an annuity whose payments occur at the end of each period.
