Interest rate and related terminology varies. The definitions provided here reflect usage within the TValue program. Our experience with a wide variety of users has led us to this usage. Be alert to possible differences between TValue and your own requirements.
Note: You may see these terms capitalized and sometimes bolded throughout the TValue 6 Help documents.
Add-on Interest
Add-on interest is a form of pre-computed interest. More
Amount Financed
Amount of a loan, minus points, prepaid interest, and other finance charges entered in a Loan Event cash flow line.
Annual Percentage Rate (APR)
The annual percentage rate is defined by the Federal Reserve Board in its Regulation Z. It is the interest rate that every lender is required to reveal in its statement to the borrower. More
Annual Percentage Yield (APY)
The annual percentage yield (APY) measures the total amount of interest paid on an account based on the interest rate and the frequency of compounding. The APY is expressed as an annualized rate based on a 365 day year. More
Annuity
A series of equal payments at equal intervals. More
Balloon Payment
A payment added at the end to pay off a loan or withdraw a remaining balance. More
Cash Flows
Cash flows can consist of loans, payments, deposits, withdrawals, etc. Cash flows are represented as lines in the cash flow matrix of the TValue cash flow data window.
Compound Interest
A method of computing interest charges in which interest is computed at regular intervals or at payment dates. More
Compound Period
The period (from one day to one year) after which interest is computed and added to principal. More
Daily Rate
The Nominal Annual Rate divided by the year length in days. This length is 365, 364, or 360 depending on the Year Length selected from the Calculations group on the Configuration ribbon. TValue does not use a 366 day year. More
Effective Annual Rate
The Effective Annual Rate would show, for example, the cost of borrowing one dollar for one year where compounding is more frequent than annual. More
End Date
The Date of the last Event on a cash flow line. More
Future Value (FV)
The balance on a given date in the future after a number of deposits have been made. It is often the value of the last cash flow in a problem. In TValue, if you are thinking in terms of future value, you will probably be using Deposit and Withdrawal Events, and the future value will be the value of the final withdrawal. Example
Loan Event
Typically the first event in lending transactions and associated with a Payment Event. More
Negative Amortization
Negative amortization occurs when the interest due at a payment date is more than the amount of the payment. More
Net Present Value (NPV) / Present Value (PV)
The value of the first cash flow in a problem. In loan or lease situations, the PV / NPV value would normally be the first Loan Event. In investment analysis situations, the PV / NPV would normally be the first Deposit Event. We say "normally" because it's quite possible to do loan or lease problems using Deposit/Withdrawal Events and also to do investment analysis using Loan/Payment Events. Example
Nominal Annual Rate
The Nominal Annual Rate is the rate stated in loan and deposit agreements. More
Odd Days
The number of days before the normal starting date for loan payments. More
Open Balance
This option in the Rounding dialog leaves the left over amount as a balance on the amortization schedule. More
Payment Period
The time period between successive payments specified on a single cash flow line. The payment period is usually the same as the compounding period. The payment period must be equal to or greater than the compound period.
Periodic Rate
The rate that is multiplied times the balance at the beginning of a compounding period in order to find the interest for the period. More
Points & Fees
An upfront finance charge computed as a percentage of the Loan Amount. A "point" is one percent of the Loan Amount. For example, if a $100,000 note is negotiated with "two points", the lender will charge $2,000 as a finance fee to be paid at settlement. More
Prepaid Interest
The odd interest amount that accrues from the period of time between when escrow closes and when the first interest period begins. More
Present Value (PV) / Net Present Value (NPV)
The value of the first cash flow in a problem. In loan or lease situations, the PV / NPV would normally be the first Loan Event. In investment analysis situations, the PV / NPV would normally be the first Deposit Event. We say "normally" because it's quite possible to do loan or lease problems using Deposit/Withdrawal Events and also to do investment analysis using Loan/Payment Events. Example
Simple Interest
The interest amount that is determined by multiplying the principal balance by the interest rate per period by the number of periods. More
Valuation Date
Term used in TValue for the date of the Present Value (PV) / Net Present Value (NPV) or Future Value (FV) of all cash flows. In TValue, the PV / NPV would typically be the first cash flow, and the FV would be the last cash flow.
Yield
Generally calculated as an annual rate of return, expressed as a percentage. More