Discounting refers to the growth process that turns $1 today into a greater value several periods in the future.

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Discounting refers to the process of reducing the value of a future payment or stream of payments to reflect the time value of money and other factors such as inflation, risk, and opportunity cost. Therefore, $1 today would be worth less in the future due to factors such as inflation and the potential to earn interest or returns on investments.

Discounting Refers to the Growth Process That Turns $1 Today