The process of restating future cash flows in today's dollars is known as:
A) Budgeting.
B) Annualization.
C) Discounting.
D) Payback period.
E) Capitalizing.

Question

Quizplus · Accepted Answer

The process of restating future cash flows in today's dollars is known as discounting. This is because future cash flows are discounted back to their present value using a chosen discount rate to reflect the time value of money. Budgeting refers to the process of planning and allocating resources for a specific period. Annualization is the process of adjusting a value to reflect an annual figure. Payback period is the length of time required to recoup the initial cost of an investment. Capitalizing refers to recording the cost of an asset as a long-term asset on the balance sheet rather than as an expense on the income statement.

The Process of Restating Future Cash Flows in Today's Dollars