The present value of a future stream of cash flows is what that stream
A)was worth in yesterday's dollars.
B)is worth in today's dollars.
C)will be worth in future dollars.
D)might be worth in future dollars.

Question

Quizplus · Accepted Answer

Present value is the current value of a future stream of cash flows discounted back to today. It takes into account the time value of money and inflation, determining what it is worth in today's dollars. Therefore, option B is the best choice. Options A, C, and D do not accurately describe the concept of present value.

The Present Value of a Future Stream of Cash Flows