Before you can calculate the present value of a cash flow,you must

Question

Quizplus · Accepted Answer

To calculate the present value of a cash flow, both identifying the amount and timing of each cash flow and determining the appropriate discount rate are necessary. Identifying the cash flow helps in knowing the timing and amount of each cash flow. The appropriate discount rate is required to account for the time value of money and to adjust the future cash flows to the present value. Therefore, both options A and B are necessary.

Before You Can Calculate the Present Value of a Cash