Which financial concept represents future cash flows adjusted for inflation or interest rates?

The concept that represents future cash flows adjusted for inflation or interest rates is the time value of money. This principle reflects the idea that a certain amount of money today is worth more than the same amount in the future due to its potential earning capacity. This is primarily because money can earn interest or appreciate in value over time, making it important to consider how future cash flows need to be adjusted to present value terms.

In applications related to cost management and financial analysis, the time value of money is crucial as it allows practitioners to evaluate the true worth of future cash flows by discounting them back to their present value, taking into account factors like inflation and interest rates. This adjustment is essential for making informed investment decisions, evaluating project viability, and comparing cash flows that occur at different times. Understanding this concept ensures that financial professionals can accurately assess the profitability and feasibility of projects or investments over a given time period.