The time value of money is explicitly recognized through the process of
A)interpolating.
B)discounting.
C)annuitizing.
D)budgeting.

Question

Quizplus · Accepted Answer

The time value of money accounts for the fact that a dollar today is worth more than a dollar in the future. Discounting is the process of determining the present value of future cash flows based on a chosen interest rate. Therefore, discounting recognizes the time value of money. Interpolating refers to estimating unknown values between known values, annuitizing refers to converting a lump sum into a series of regular payments, and budgeting is the process of creating a financial plan for the future.

The Time Value of Money Is Explicitly Recognized Through the Process