Q390
Procedure of finding present values in time value of money is classified as
A.
compounding
B.
discounting
AnswerC.
money value
D.
stock value
Answer: Option B
Solution
Answer: Option B
Solution:
Procedure of finding present values in time value of money is classified as discounting. Discounting is the process of determining the present value of a payment or a stream of payments that is to be received in the future. Given the time value of money, a dollar is worth more today than it would be worth tomorrow. Discounting is the primary factor used in pricing a stream of tomorrow's cash flows.