The proposition that discounted future amounts are equal to a specific present amount is known as:
A) the concept of equivalency.
B) compounding.
C) future value.
D) capital budgeting.
E) discounting.

Question

Quizplus · Accepted Answer

The concept of equivalency states that a specific present amount is equal to the sum of discounted future amounts. This is the underlying principle behind discounting and capital budgeting. Compounding refers to the process of earning interest on both the principal amount and the interest earned on that amount over time. Future value is the value of an investment at a specified date in the future, assuming a certain rate of return.

The Proposition That Discounted Future Amounts Are Equal to a Specific