Since investors prefer to have money now rather than later,money received next week,instead of today,is not worth as much to those receiving it.Therefore an adjustment to the prospective cash flows is required.This process is referred to as:
A)compounding
B)discounting
C)amortizing
D)hedging

Question

Quizplus · Accepted Answer

The process described in the question is discounting, which is the process of adjusting future cash flows to their present value using a discount rate that accounts for the time value of money. This is because money received in the future is worth less than money received today due to factors such as inflation and opportunity cost. Compounding involves calculating the future value of an investment, amortizing involves spreading out the cost of an asset over time, and hedging involves strategies to manage the risk of an investment.

Since Investors Prefer to Have Money Now Rather Than Later,money