The process by which we determine the present value of an amount to be received at some time in the future is called:
A) the concept of equivalency.
B) compounding.
C) discounting.
D) capital budgeting.
E) future value.

Question

Quizplus · Accepted Answer

Discounting is the process of determining the present value of an amount to be received in the future. This is usually done by applying a discount rate to the future amount, which represents the time value of money and the risk associated with delaying the receipt of the funds. The other choices are either unrelated or refer to different financial concepts.

The Process by Which We Determine the Present Value of an Amount