Procedure of finding present values in time value of money is classified as____________?
Correct answer: B. Discounting
- A. Compounding
- B. Discounting
- C. Money value
- D. Stock valueCompare Business Loans
Explanation
Discounting is the process of converting a future cash flow into its present value by removing the effect of interest over time. Compounding performs the reverse calculation by finding a future value from a present amount.
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Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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