Future value focuses on the valuation of cash flows received over time, while present value focuses only on the valuation of cash flows received at a point in time.

Question

Quizplus · Accepted Answer

The statement is incorrect. Future value is the value of cash flows at a specific point in the future, based on an assumed interest rate, while present value is the value of cash flows at a specific point in the present, also based on an assumed interest rate. Both present value and future value consider cash flows received over time, but they differ in focus.

Future Value Focuses on the Valuation of Cash Flows Received