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• Ordinary Annuity


  A series of equal cash flows or payments that occur at the end of each period
• Annuity Due


  Similar to an ordinary annuity, but with payments made at the beginning of each period
• Present Value (PV)


  The current value of a future sum of money or a series of future cash flows, discounted to reflect the time value of money
• Present Value represents the amount that a future sum or cash flow is worth in today's dollars
• Concept of Present Value

  Money received or paid in the future is worth less than the same amount received or paid today due to the time value of money
• Discounting


  Reducing the value of future cash flows or payments to their present value based on the time value of money
• Determining the Present Value of a Perpetuity

  Use the formula for the present value of an infinite series of cash flows
• Perpetuity


  A series of equal cash flows that continues indefinitely
• Determining the Annual Growth or Interest Rate


  Use the formula for compound interest
• Compound Interest


  Interest calculated on both the initial principal and any accumulated interest from previous periods