Which term describes future cash flows calculated to present value in a cost-benefit analysis?

The term that describes future cash flows calculated to present value in a cost-benefit analysis is present value. Present value is a financial concept used to determine how much future cash flows are worth today, taking into account a specified rate of return or discount rate. This is essential in cost-benefit analysis because it allows analysts to compare the value of benefits received at different times in the future with the costs incurred today.

When performing cost-benefit analysis, understanding present value helps stakeholders make informed decisions by accurately assessing the long-term benefits of an investment against its costs. It reflects the time value of money, which is a fundamental principle in finance indicating that a dollar today has more value than a dollar in the future due to its potential earning capacity.

Other terms such as opportunity costs, payback period, and organizational strategy are related to financial analysis in different ways, but they do not specifically refer to the process of translating future cash flows into an equivalent present-time value. Opportunity costs involve evaluating the potential returns of alternative investments, while payback period measures the time taken to recover an initial investment without adjusting for the time value of money. Organizational strategy is a broader concept that encompasses plans and decisions made to achieve long-term goals but does not directly relate to cash flow valuation