Chapter 11: Economic Evaluation of Investment in the Health Sector

Question 1

P

Answer 1

Present single sum of money (normally refers to a sum of money at time zero, but may represent a sum of money at any point from which we choose to measure time)

Question 2

F

Answer 2

Future single sum of money at some designated future date

Question 3

A

Answer 3

The amount of each payment in a uniform series of equal payments made at each period. When the periods are years, A refers to annual payment or value.

Question 4

n

Answer 4

The number of interest compounding periods in the project evaluation life.

Question 5

i

Answer 5

The period compound interest rate (may refer to either the cost of borrowing or the rate of return)

Question 6

The three basic types of time value of money calculations

Answer 6

1. Calculations of the future value F from either P or A
2. Calculations of the present value P from either F or A.
3. Calculations of the uniform and equal annual (or periodic) values A from either F or P.