Terry is calculating the present value of a bonus he will receive next year. The process he is using is called:

Business

1 answer:

MArishka [77]1 year ago

3 0

The process used by Terry is known as Discounting.

<h3><u>What is Discounting?</u></h3>

A value obtained in the future is converted to an equivalent value received right away through the process of discounting.
Discounting takes into account the relative value of a dollar received now against one received in 50 years, for instance.
By converting future dollars into current dollars, the discounting process allows for the conversion of units of value over a range of time periods.
Decision-makers utilize discounting to fully comprehend the costs and benefits of policies that have long-term effects.

Discounting is a method for calculating the gap between current and future values.

Know more about Discounting with the help of the given link:

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