Calculating the present value of a future cash ﬂow to determine its value today is called:
A) Discounted cash ﬂow valuation.
B) The discount rate.
C) Future value compounding.
D) Present value compounding.
E) Timing the cash ﬂow.

Question

Quizplus · Accepted Answer

Discounted cash flow valuation involves calculating the present value of future cash flows. This is done by applying a discount rate to the future cash flows in order to account for the time value of money. Therefore, choice A is the correct answer. The other choices are either unrelated or incorrect.

Calculating the Present Value of a Future Cash ﬂOw to Determine