The process of evaluating the present value of any stream of future cash flows so that management can compare two streams of cash flows in terms of their financial value is

Question

Quizplus · Accepted Answer

The process described in the question is the definition of discounted cash flow (DCF) analysis, which involves calculating the present value of future cash flows using a discount rate to adjust for the time value of money. Option A (annual cash flow analysis) is not the correct answer as it does not involve adjusting for the time value of money. Option B (discretionary cash flow analysis) is also incorrect as it relates to revenue less expenses that are not related to operations. Option D (future cash flow analysis) does not involve the calculation of present values. Therefore, option C (discounted cash flow analysis) is the best choice.

The Process of Evaluating the Present Value of Any Stream