General Studies · Time Value of Money
Which of the following correctly explains the rationale behind discounting future cash flows?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Time value of money applies only to long-term investments
- 2Present cash flows are riskier than future cash flows
- 3Future cash flows are uncertain and less valuable than present cash flows✓
- 4Inflation has no effect on value of money
Correct answer
Future cash flows are uncertain and less valuable than present cash flows
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