Dollars received in the future are worth ________ than dollars received today. The process of calculating what dollars received in the future are worth today is called ________.A) more; discountingB) less; discountingC) more; inflatingD) less; inflating
B) less; discounting
B) less; discounting.
Dollars received in the future are worth less than dollars received today due to the time value of money, which is the idea that money available today is worth more than the same amount of money in the future because it can earn interest or returns when invested.
The process of calculating what dollars received in the future are worth today is called discounting. Discounting is the process of determining the present value of a future payment or stream of payments by adjusting them for the time value of money.
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