Why Are the Capital Costs of Long-Term Projects Discounted to Present

question 7

Multiple Choice

Why are the capital costs of long-term projects discounted to present value?

• A) Because money that is received in the future has a greater value than money received now.
• B) To better account for the resource yield that will be foregone by a long-term investment.
• C) Because the amount of money that is spent in interest payments for the project should not be incorporated into the capital budget.
• D) To better account for the relative stability of tax-free government investments as compared to private sector projects.

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