Asked by Carlos Iturralde on Jun 03, 2024
Verified
The process of restating future cash flows in today's dollars is known as:
A) Budgeting.
B) Annualization.
C) Discounting.
D) Payback period.
E) Capitalizing.
Discounting
The process of determining the present value of a future amount of money or stream of income.
- Recognize the significance of the time value of money in making capital allocation decisions.
Verified Answer
JG
Jennell GarmaJun 06, 2024
Final Answer :
C
Explanation :
The process of restating future cash flows in today's dollars is known as discounting. It involves adjusting the future cash flows to reflect the time value of money and the risk involved. This process is commonly used in financial analysis to evaluate the profitability of an investment or project.
Learning Objectives
- Recognize the significance of the time value of money in making capital allocation decisions.
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