Answered

Join the growing community of curious minds on IDNLearn.com and get the answers you need. Get accurate and detailed answers to your questions from our knowledgeable and dedicated community members.

In the context of capital budgeting, what is meant by the word "discounting"?

A. Using the lowest rate among a set of reasonable possibilities when choosing an interest rate for analysis.
B. Using the highest rate among a set of reasonable possibilities when choosing an interest rate for analysis.
C. Mathematically adjusting all future cash flows to their equivalent amounts as of today.
D. Ignoring cash flow forecasts based on estimates rather than on hard data.

Sagot :

GinnyAnsweridn

Final answer:

Discounting in capital budgeting involves adjusting future cash flows to their present value based on the chosen discount rate.


Explanation:

Discounting in the context of capital budgeting refers to mathematically adjusting all future cash flows to their equivalent amounts as of today. It involves translating the value of future consumption into current-day dollars based on the discount rate used. This discount rate reflects the interest rate or the value one places on current versus future consumption.


Learn more about Discounting in Capital Budgeting here:

https://brainly.com/question/33840705


We appreciate your contributions to this forum. Don't forget to check back for the latest answers. Keep asking, answering, and sharing useful information. Thank you for trusting IDNLearn.com with your questions. Visit us again for clear, concise, and accurate answers.