The present value of future cash flow is found by
A)locating the correct factor on a z-table.
B)using a discount factor.
C)plotting the function on a graph.
D)adding the total of all future cash flows.

Question

Quizplus · Accepted Answer

The present value of future cash flow is found by using a discount factor. This involves calculating the time value of money and discounting the future cash flows back to their present value using an appropriate discount rate. Therefore, option B is the most accurate choice. Option D is not correct as simply adding the total of all future cash flows does not account for the time value of money. Option A is also not correct as a z-table is used for finding probabilities in normal distributions and is not relevant to present value calculations. Option C is not correct as plotting a function on a graph may provide insights, but it does not directly yield the present value of future cash flow.

The Present Value of Future Cash Flow Is Found by