The procedure of converting future benefits to their present values is called…
A) An externality.
B) Compounding.
C) Discounting.
D) Contingent valuation procedure.

Question

Quizplus · Accepted Answer

The procedure of converting future benefits to their present values is called discounting. It involves calculating the value of future cash flows in today's dollars, taking into account the time value of money. This is different from compounding, which involves calculating the future value of an investment, and contingent valuation procedure, which is a method used to estimate the economic value of a non-market good or service. Externality refers to the impact of an economic activity on parties outside the transaction.

The Procedure of Converting Future Benefits to Their Present Values