Time Value of Money
Adjusted present value (APV) refers to the net present value (NPV) or investment adjusted for the interest and tax advantages of leveraging debt provided that equity is the only source of financing....
Cost of capital can best be described as the ability to cover both asset and liability expenditures while generating a profit.  In a nutshell, it’s a rate of return that helps companies decide whe...
Future value (FV) refers to a method of calculating how much the present value (PV) of an asset or cash will be worth at a specific time in the future. One dollar put into a savings account today m...
Negative amortization occurs when the principal balance on a loan (usually a mortgage) increases because the borrower's payments don't cover the total amount of interest that has accrued. For exampl...
Negative amortizing loans are loans in which the loan's principal balance increases even though the borrower is making payments on the loan. For example, let's assume that John wants to borrow $100,...
Operating cash flow demand (OCFD) is the present value of the minimum amount of cash a capital investment must generate over its life in order to meet the investor's minimum required return. Let's a...
Operating cash flow margin is cash from operating activities as a percentage of sales in a given period.  Operating cash flow margin is generally calculated using the following formula: Operating C...
Simple interest is a basic formula for calculating how much interest to apply to a principal balance.  Simple Interest = Interest Rate x Principal Balance For example, let's assume that John Doe p...