The current value of a stream of profits in the future is:
A) estimated future value.
B) hypothetical value.
C) net present value.
D) fundamental value.

Question

Quizplus · Accepted Answer

The current value of a stream of profits in the future is referred to as its net present value (NPV), which involves discounting future cash flows to their present value. Option A is incorrect because estimated future value does not take into consideration the time value of money. Option B is incorrect because hypothetical value implies a theoretical and uncertain future value. Option D is incorrect because fundamental value refers to the intrinsic or real value of an asset, which may or may not account for future cash flows.

The Current Value of a Stream of Profits in the Future