Which of the following statements best captures the intuitive reason behind discounting?
A) Since incomes rise over time, discounting means that we place less weight on benefits and costs today and more weight on benefits in the future.
B) Since dollars today can be invested, to obtain $1 in the future we have to give up less than $1 today. Hence future benefits and costs are given more weight than benefits and costs today.
C) Since investments yield a return, we have to give up less than $1 today to obtain $1 in future benefits. Hence we place less weight on future benefits and costs than we would on benefits and costs that dollars occur today.
D) Since dollars today can be invested, yielding a positive return, discounting places more weight on future returns.
Answer: C
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