Amortization

The process of repaying a loan or depreciating an asset over time. Term

Financing and accounting

Annuity

A constant periodic payment that includes both interest and amortization of a loan.

Loan repayment

Repayment

The part of a regular payment that is used to repay the original loan amount.

Loan repayment

Interest

The cost of borrowed money, calculated as a percentage of the outstanding loan amount.

Loan repayment and financing

Repayment schedule

A schedule that shows the regular payments for repaying a loan over time.

Loan repayment

Residual debt

The remaining loan amount to be paid after a certain number of payments.

Loan repayment

Term

The period over which a loan must be repaid.

Loan repayment and financing

Nominal interest rate

The contractually agreed interest rate of a loan, excluding fees or inflation.

Loan repayment and financing

Effective interest rate

The actual interest rate of a loan, taking into account all fees and costs.

Loan repayment and financing

Loan amount

The original amount borrowed on a loan.

Loan repayment and financing

Initial investment

The amount spent at the beginning of an investment project.

Investment planning

Cash flow

The net amount of cash flowing into and out of a company.

Financial Planning and Investment Valuation

Discount rate

The interest rate used to discount future cash flows to their present value.

Financial Planning and Investment Valuation

Net present value

The present value of all future cash flows of an investment, less the initial investment.

Investment valuation

Discounting

The process of calculating the present value of future cash flows using a discount rate.

Financial Planning and Investment Valuation

Useful life

The period over which an asset can be used economically.

Accounting and depreciation

Residual value

The estimated value of an asset at the end of its useful life.

Accounting and depreciation

Book value

The value of an asset as shown in a company's financial accounts.

Depreciation and amortization

Declining balance depreciation

A depreciation method in which the value of an asset is initially depreciated at a faster rate.

Accounting and tax planning

Straightline depreciation

A depreciation method in which the value of an asset is depreciated evenly over its useful life.

Accounting and tax planning

Performancebased depreciation

A depreciation method based on the actual use or performance of an asset.

Accounting and tax planning
