To assess the present value of a future cash flow, you should select discount the cash flow back to the present. Thus the correct answer is B.
The quantity of money that enters and exits a business is referred to as cash flow. Businesses get revenue from sales and spend it on operating costs.
When cash flow is positive, organizations have more money coming in than going out which allows you to pay your bills and cover extra expenses of a business.
The approach of calculating the current worth of all future revenues estimated cash which includes the initial capital expenditure is known as net present value. Present value is used to determine the future price level if one is developed.
Therefore, option A discount the cash flow back to the present is the appropriate answer.
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