Benefits received in the future are adjusted to their present value discounted because:
A) they are uncertain.
B) the future may never come, or may come under unforeseen circumstances.
C) markets indicate that people need to be compensated for postponing the enjoyment of benefits.
D) None of the above is true.

Question

Quizplus · Accepted Answer

The discounting of future benefits is a reflection of the fact that it is generally preferable to have something now rather than later. Economic theory suggests that markets determine the discount rate which reflects people's preference for present consumption rather than future consumption. Therefore, people need to be compensated for postponing the enjoyment of benefits.

Benefits Received in the Future Are Adjusted to Their Present