An amount of money to be received in the future is worth less today than the stated present value amount.

Name: An amount of money to be received in the future is worth less today than the stated present value amount.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

This is due to the time value of money and the concept of inflation, which reduces the purchasing power of money over time. Therefore, future amounts of money must be discounted to reflect their present value.

An Amount of Money to Be Received in the Future