The key to present value calculations is that they
A) are appropriate only for funds in the same time period.
B) provide a common unit for measuring funds at different times.
C) provide accurate answers only in a low-inflation environment.
D) provide accurate answers only in a high-inflation environment.

Question

Quizplus · Accepted Answer

Present value calculations provide a way to compare funds at different points in time by discounting future cash flows to their current value using a common unit of measurement. It is not limited to a particular time period or inflation environment.

The Key to Present Value Calculations Is That They