By converting dollars to be received in the future into current dollars, the present value methods take into consideration that money

Question

Quizplus · Accepted Answer

Present value methods take into consideration the time value of money, meaning that money received in the future is worth less than money received today due to inflation, interest rates, and other factors. Therefore, by converting future dollars into current dollars, present value methods account for the opportunity cost of waiting to receive the money.

By Converting Dollars to Be Received in the Future into Current