What does the concept of 'present value' refer to in the context of bill discounting? Question 12Answer a. The face value of a bill before maturity b. A fixed value set by the bank for discounting purposes c. The current worth of an amount of money in the future d. The actual value after discounting future profitability
In the context of bill discounting, the concept of 'present value' refers to:
c. The current worth of an amount of money in the future
Present value is a financial concept that calculates how much a future sum of money is worth today, taking into account a specific rate of return or discount rate. In bill discounting, it is used to determine the value of a bill before its maturity date, reflecting the time value of money.