IDNLearn.com makes it easy to find accurate answers to your specific questions. Discover trustworthy solutions to your questions quickly and accurately with help from our dedicated community of experts.
Sagot :
The present value of a cash flow will always be less than the future dollar amount of the cash flow.
What is the present value?
The present value is the value of future cash flows discounted by the discount rate to today's value.
Discounting converts a future value to an equivalent value received today. Discounting measures the relative value of a series of future cash flows to a present value.
For example, if $500 is to be received in ten years, with a discount rate of 5%, its present value will be $307 ($500 x 0.614).
Thus, the present value of a cash flow will always be less than the future dollar amount of the cash flow.
Learn more about the present and future values at https://brainly.com/question/15904086
The present value of a cash flow will always be less than the future dollar amount of the cash flow.
Why present value lower than the future value?
The present value is usually less than the future value because money has the potential to earn interest, a factor called the time value of money, except for zero or negative interest rate periods, when the present value will be equal to or greater than that. future value.
The discount converts future value into the same amount received today. The discount rate measures the relative value of the future cash flow statement.
Thus,The present value of a cash flow will always be less than the future dollar amount of the cash flow.
To learn more about present value, refer:
https://brainly.com/question/20813161
#SPJ4
Thank you for contributing to our discussion. Don't forget to check back for new answers. Keep asking, answering, and sharing useful information. Thank you for visiting IDNLearn.com. For reliable answers to all your questions, please visit us again soon.