Asked by Miranda Zapien on Jun 19, 2024
Verified
The term to convert a future value amount into its present value is:
A) Annuitize
B) Compound
C) Discount
D) Multiply
E) Amortize
Present Value
Present value is the today's worth of an anticipated future amount of money or cash flows, factoring in a specified rate of return.
Discount
A reduction applied to the price of goods, services, or securities.
Future Value
The value of an asset or an amount of money at a specific point in the future, taking into account interest or capital gains.
- Acknowledge the criticality of the discount rate in the determination of the present value of prospective cash flows.
Verified Answer
PS
Putri SherlyJun 22, 2024
Final Answer :
C
Explanation :
The term "discount" refers to the process of determining the present value of a future amount by applying a discount rate. This process is essential in finance for comparing the value of money at different points in time.
Learning Objectives
- Acknowledge the criticality of the discount rate in the determination of the present value of prospective cash flows.