Finance 301 Owl Questions And Answers Study Guide Rated A+

In the context of calculating present values, what is another name for the interest rate? {Ans: the discount rate}A bank just launched a new savings account that earns the rate of 6.85% compounded daily. The bank points out that the rate of 6.85% is equivalent to earning 7.09% compounded annually. What label do we give to the 7.09% in this example? {Ans: effective annual interest rate}What do we call the process of turning future cash flows into current cash flows? {Ans: discounting}Ray is in a situation where he needs to choose whether to go to graduate school or accept a job at a local bank with $35000 annual salary. Suppose he chooses graduate school. In this case, what do we call the $35,000? {Ans: an opportunity cost}Dollars to be received or paid out through time are different commodities that cannot simply be added together or subtracted from each other. What is this concept describing? {Ans: time value of money}An annuity represents a stream of payments that occur at what time each year? {Ans: at the end of each period}