Fin 380 Lecture 5" Tvom

Front 1

what 3 things determine the value of an asset

Back 1

return
time
risk

Front 2

What is a "lump sum"

Back 2

a single deposit

Front 3

Explain what "future value of a lump sum" means
-what acronym do we use
-what table do we use

Back 3

the future value that a single deposit grows to over time
-FVIF (Future Value Interest Factor)
-D-1

Front 4

what is the rule of 72
-what is the equation

Back 4

shows how long it takes, or what interest you need, to double your money
-years to double money = [72 / interest rate (%)]

Front 5

Explain what "future value of an annuity" means
-what acronym do we use
-what table do we use

Back 5

What a series of future deposits grows to over time
-FVIFA (Future Value Interest Factor of an Annuity)
-D-2

Front 6

define annuity, annuity due, and ordinary/regular annuity

Back 6

annuity - a series of equal payments (or benefits) made at equal time intervals
-annuity due - payment is made at the beginning of the period
-ordinary/regular annuity - payment is made at the end of the period

Front 7

define "sinking fund"
-what acronym/table do we use
-what phrase tells us to use this technique

Back 7

deposits that are needed to accumulate a future amount
-FVIFA, Table D-2
-"save annually"

Front 8

Explain what "present value of a lump sum" means
-what acronym do we use
-what table do we use

Back 8

what a future benefit is worth to you today
-PVIF (Present Value Interest Factor)
-Table D-3

Front 9

Explain what "present value of an annuity" means
-what acronym do we use
-what table do we use
-what two types of payments/withdrawals use this technique

Back 9

what a series of future benefits (or payments) are worth to you today
-PVIFA (Present Value Interest Factor of an Annuity)
-Table D-4
-Annual Loan Payments and Retirement Withdrawals

Front 10

what is perpetual annuity
-what is the formula

Back 10

infinite life - living off your interest
-Annuity / Interest rate (decimal) = retirement savings

Front 11

what is perpetual annuity with effects of inflation
-what is formula

Back 11

each year your withdrawals increase to take into account inflation
-Annuity / (Int. rate - Inflation rate) = retirement savings