In a program-level cost-benefit analysis, which step ensures future values are comparable over time?

• A. Discount future values
• B. Use nominal values only
• C. Ignore time value and compare totals
• D. Convert all values to future values

Answer: (A)

Adjusting for the time value of money is essential so costs and benefits from different years can be compared on a like-for-like basis. Discounting future values means converting future costs and benefits back to their present value, using a discount rate that reflects the opportunity cost of capital and risk. This gives all amounts in today's dollars, allowing apples-to-apples comparisons across years. Using nominal values ignores inflation and financing costs, which can distort the analysis. Simply summing totals without accounting for when they occur treats money from different years as equally valuable, which isn’t true. Converting to future values doesn’t standardize comparisons in a single reference time; discounting to present value is the standard way to make future outcomes comparable. So discounting future values is the best approach.