Final answer:
Cash flows occurring at different times should not be compared unless they have been discounted to a common date, to account for the time value of money and changes in interest rates and thereby ensure a fair comparison.
Step-by-step explanation:
The question addresses the concept of comparing cash flows that occur in different time periods. It's important in the field of finance to ensure that the comparison is meaningful and accurate. The correct answer to why cash flows occurring in different periods should not be compared unless discounted to a common date is option d: the flows have been discounted to a common date. This process is known as discounting, which adjusts the future cash flows for the time value of money, thereby allowing a proper comparison as if all cash flows occurred at the same point in time.
Factors such as interest rates, inflation, and opportunities for alternative investments affect the time value of money. By discounting future cash flows to their present value using an appropriate discount rate, we transform those future amounts into today's dollars, which can be directly compared to current or past financial figures.