Question

The process of calculating the present value of a future cash flow is called

Answer 1

the process of calculating the present value of a future cash flow is called discounted value .

Answer 2

Answer:

The process of calculating the present value of a future cash flow is called compounding.

Explanation:

Compounding is that the process whereby interest is credited to an existing principal amount as well as to interest already paid. Compounding thus are often construed as interest on interest—the effect of which is to magnify returns to interest over time, the so-called “miracle of compounding.” Compounding is that the ability of an asset to generate earnings, which are then reinvested or remain invested the goal of generating their own earnings. In other words, compounding refers to generating earnings from previous earnings.

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