D076 Finance Skills for Managers Terms and questions for module 5
Ordinary annuities - a series of equal payments made at the end of consecutive periods over a fixed length of time Annuities due - a series of equal payments made at the beginning of consecutive periods Perpetuities - a constant stream of identical cash flows that continues forever Compounding - finding a future value given a present value Discounting - finding a present value given a future value. Time value of money - the idea that money that is available at the present time is worth more than the same amount in the future Annuities - equally spaced cash flows of equal amounts. Lolo invested $30,000 today in an account that gives 3% interest. Starting one year from today, she will be able to pull out little over $3,500 a year. What does the $30,000 represent? - Present value Twenty years ago, Mateo started an investment account with $2,000. He then invested $100 into the account every month at the end of each month. Today, he has $46,528 in the same account. What is the term for the $100 monthly cash flows? - Annuity negative, positive - When doing TVM calculations in Excel, it is important to make sure that cash outflows are indicated with a ________ value and cash inflows are indicated with a ________ value.
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