present value / future value
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Future cash flows are discounted at the
discount rate,
Determining the appropriate discount rate is the
key to properly valuing future cash flows
Present value (PV) is the current worth of a future sum of money or stream of cash flows given a specified...
rate of return.
higher the discount rate...
the lower the present value of the future cash flows
future value best illustrates
the principle of time value of money and the need for charging or paying additional risk-based interest rates.
