When solving for present value,we use the term compounding of cash flows rather than the term discounting of cash flows.

Question

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When solving for present value, we use the term discounting of cash flows, not compounding of cash flows. Compounding refers to the process of calculating future values by adding interest to the initial investment, while discounting refers to the process of calculating present values by subtracting interest from future cash flows.

When Solving for Present Value,we Use the Term Compounding of Cash