Respuesta :

The given statement, the present value of a cash flow will never be greater than the future dollar amount of the cash flow, is true.

Does a cash flow's present value diminish as the quantity of future time increases?

When the discount rate increases and continues to increase as time goes on, the present value of a cash flow will decrease, other things being equal. Current cash flows can be transferred to the future by compounding the cash flow at the suitable discount rate.

What is implied by the term "present value of cash flows"?

Present value (PV) is the current value of a future financial asset or stream of cash flows, given a specific rate of return. Future cash flows are discounted to some extent depending on the discount rate, and the greater the rate, the lower the current value of those future cash flows will be.

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