FUTURE VALUE OF A SERIES OF CASH FLOWS Flashcards
1
Q
An annuity is a
A
FINITE set of level, or identical, and sequential cash flow
2
Q
An ordinary annuity has
A
a first cash flow that occurs one period from now
(indexed at t = 1).
3
Q
A perpetuity is a
A
perpetual annuity, or a set of level, or identical, never-ending
sequential cash flows, with the first cash flow occurring one period
from now.
4
Q
general annuity formula
A
FV = A [ (1 + r)^n - 1 / r ]
5
Q
A
