The process of converting future cash flows into their present value is called:
A) annualizing.
B) discounting.
C) compounding.
D) capital budgeting.

Question

Quizplus · Accepted Answer

The process of converting future cash flows into their present value is known as discounting. It involves adjusting the future cash flows by a discount rate to account for the time value of money. Annualizing is calculating the annual equivalent of a non-annual amount, compounding is the process of earning interest on interest, and capital budgeting involves evaluating and analyzing potential investments or expenditures.

The Process of Converting Future Cash Flows into Their Present