To determine the present value of a future amount,one should ________ the future cash flows.
A)annuitize
B)compound
C)discount
D)multiply

Question

Quizplus · Accepted Answer

To determine the present value of a future amount, we need to discount the future cash flows using an appropriate discount rate. This takes into account the time value of money, i.e., the fact that money today is worth more than the same amount of money in the future. Therefore, C) discount is the best choice.

To Determine the Present Value of a Future Amount,one Should