The process of computing the value of a current sum of money at some future date is called:
A) discounting.
B) capital budgeting.
C) present value analysis.
D) compounding.
E) net present value analysis.

Question

Quizplus · Accepted Answer

Compounding is the process through which the value of an investment grows exponentially over time due to the earnings on both the original principal and the accumulated earnings from preceding periods. This concept is used to determine the future value of a current sum of money.

The Process of Computing the Value of a Current Sum