Final answer:
Present discounted value is a tool used to compare present costs to future benefits in various contexts such as business investments, government proposals, and environmental policies. It is also relevant to individuals receiving future payments such as lottery winners.
Step-by-step explanation:
Present discounted value is a widely used analytical tool outside the world of finance. It is used to compare the present costs of an investment to the present discounted value of future benefits. This tool helps businesses make decisions on physical capital investments and government evaluate proposals such as adding safety features to a highway.
Some academic disputes, like those over environmental policies, also rely on present discounted value analysis. For example, when considering reducing carbon dioxide emissions for the long-term benefit of reducing global warming, policymakers need to compare the present costs of pollution control measures with the future benefits of a stable climate.
Additionally, individuals who win lotteries or receive payments over a number of years may be interested in knowing the present discounted value of those future payments to determine their current worth.