Which of the following would be the best brief deﬁnition of present value?
A) assets minus liabilities incurred to acquire the assets
B) beneﬁts of an investment minus its costs
C) the sum of all the past values of an asset
D) the current value of the expected future returns on an asset

Question

Quizplus · Accepted Answer

Present value is the current value of the expected future returns on an asset, taking into account the time value of money. This means that future cash flows are discounted to their current value by applying a discount rate that reflects the cost of capital or the rate of return required by investors. Options A, B, and C are not accurate definitions of present value.

Which of the Following Would Be the Best Brief Deﬁnition