The process of calculating what dollars received in the future are worth today is called
A) calculating the yield to maturity.
B) discounting the future.
C) compounding the future.
D) compounding the present.

Question

Quizplus · Accepted Answer

Discounting the future involves calculating the present value of future cash flows by taking into account the time value of money and the risk involved. It helps in comparing investments with different time horizons and determining the most valuable investment option. Calculating the yield to maturity involves determining the rate of return on investments such as bonds, whereas compounding relates to calculating the future value of money invested today.

The Process of Calculating What Dollars Received in the Future