Present value is best defined as the:
A) worth or value today of future expected returns or costs.
B) worth in the future of a current flow of returns or costs.
C) current worth of a financial asset purchased in the past.
D) expected future value of a financial asset purchased today.

Question

Quizplus · Accepted Answer

Present value refers to the current worth or value of future expected returns or costs. It considers the time value of money, which means that money received or paid in the future is worth less than the same amount received or paid today. Present value is calculated by using a discount rate to adjust future cash flows to their current value. Option B, C and D do not accurately define present value.

Present Value Is Best Defined as The