Which of these statements is true of discounting?
A) It is the reverse of compounding.
B) It significantly decreases the value of a future amount to the present.
C) It is the process of figuring out how much an amount that you expect to receive in the future is worth today.
D) All of the above.

Question

Quizplus · Accepted Answer

Discounting is indeed the reverse of compounding, as it calculates the present value of a future amount rather than the future value of a present amount. It decreases the future amount to its present value, taking into account the time value of money, which is the process described in all the options provided.

Which of These Statements Is True of Discounting