The correct answer is: C. Both A and B.
The concept of present value is based on the principle of compounding and the principle of discounting.
The principle of compounding states that the value of a sum of money will increase over time if it is invested at a certain interest rate. The higher the interest rate, the more the value of the sum of money will increase.
The principle of discounting states that the value of a sum of money in the future is worth less than the same sum of money today. This is because money can be invested today and earn interest, so it will be worth more in the future.
The present value of a sum of money is the amount of money that would need to be invested today at a certain interest rate in order to have that sum of money in the future.
For example, if you want to have $100 in 1 year, and the interest rate is 5%, then you would need to invest $95.24 today. This is because $95.24 invested at 5% for 1 year will grow to $100.
The present value of a sum of money is used in many financial calculations, such as calculating the future value of a loan or the amount of money that needs to be saved for retirement.