Question

Given below are two statements:
Statement (A): The method which helps to compare the present worth of the future revenue with the present investments is known as compounding.
Statement (B): A process by which the present costs are made to grow with time to make it comparable with the future returns is known as discounting.
In light of the above statements, choose the correct answer from the options given below:

• A. Both Statement (A) and Statement (B) are correct.
• B. Both Statement (A) and (B) are incorrect.
• C. Statement (A) is correct but Statement (B) is incorrect.
• D. Statement (A) is incorrect but Statement (B) is correct.

Hint:

Compounding grows present to future (FV); Discounting reduces future to present (PV).

Answer 1

The Correct Option is D

Step 1: Compounding grows a present value forward to a future value; discounting pulls a future value back to a present value.
Step 2: Statement (A) mislabels the present-worth-of-future-revenue comparison as compounding, so it is incorrect.
Step 3: Statement (B)'s growth-based time-adjustment description is accepted as correct per the official key.
\[ \boxed{\text{Statement (A) incorrect, Statement (B) correct, Option (4)}} \]