Question

Hunter is going to receive $3,000 in one year and he wants to know its equivalent value today. The process of determining the answer is called:_______

a. discounting
b. compounding
c. pricing
d. rating

Answer 1

Answer:

a. discounting

Explanation:

We arrive at the Present Value from Future Value through the discounting process using the the appropriate discount rate. Likewise we arrive to the Future Value by compounding the Present Value using the appropriate discount rate.