The process of converting future cash flows to what its present value is called:
A) annualizing.
B) discounting.
C) compounding.
D) capital budgeting.

Question

Quizplus · Accepted Answer

The process of converting future cash flows to their present value is known as discounting. Discounting is commonly used in financial analysis and valuation to determine the current worth of future cash flows. Approximately speaking, by calculating a present value of a sum of future cash you can determine how much money would be needed in the present to equal the future cash payments.

The Process of Converting Future Cash Flows to What Its