Present value is deﬁned as the:
A) Amount of money invested each time period for a stated number of periods.
B) Summation of the cash ﬂows received within a speciﬁed period of time.
C) Value of future cash ﬂows in today's dollars given a speciﬁc discount rate.
D) Compounded value of a principal amount given a speciﬁc rate of interest.
E) Value of an investment given simple interest for a speciﬁc period of time.

Question

Quizplus · Accepted Answer

Present value is the value today of future cash flows, taking into account a specific discount rate. It is calculated by discounting future cash flows to their present value. Option A refers to the periodic investment, option B refers to cash inflows, and options D and E mention interest, which are not directly related to present value.

Present Value Is Deﬁned as The