tvm

• Time value of money (TVM)


  Financial concept that describes the idea that money available today is worth more than the same amount in the future due to the potential earning capacity of money, which can earn interest or be invested, thereby generating more money over time
• Simple interest


  Basic way of calculating the interest charge on a loan, determined by multiplying the daily interest rate by the principal amount and by the number of days that elapse between payments, often used for short-term loans
• Compound interest


  Method of calculating interest in which the interest is added back to the principal sum so that interest is earned on that added interest during the next compounding period, often used for savings accounts, investments, and long-term loans
• Nominal interest rate


  Also known as the stated interest rate or annual percentage rate (APR), the interest rate that is advertised or stated on a loan or investment, representing the annual interest rate without taking into account compounding
• Effective interest rate


  Also known as the annual equivalent rate (AER) or annual percentage yield (APY), takes into account the effects of compounding, representing the true annual interest rate that includes the compounding of interest over a specific time period
• Stream of unequal payments


  Series of cash flows or payments that are not of equal amounts, common in various financial scenarios, such as loans, investments, or business cash flows
• Stream of uniform or equal payments


  Series of cash flows or payments that are of the same amount occurring at regular intervals, commonly encountered in various financial scenarios, such as loan repayments, annuities, or lease payments