A cash flow of $1000 received three years from today would have the same present value as a cash flow of $1000 received two years from today.

Question

Quizplus · Accepted Answer

The cash flow received three years from today would have a lower present value than the cash flow received two years from today, assuming a discount rate greater than 0%. This is because the further into the future a cash flow is received, the less it is worth in today's dollars due to the time value of money.

A Cash Flow of $1000 Received Three Years from Today