What is typically discounted when evaluating the present value of cash flows?

The correct choice pertains to the unlevered free cash flows, which are a critical factor when evaluating the present value of cash flows. Unlevered free cash flows represent the cash generated by a company's operations without accounting for its capital structure, specifically debt. This metric is particularly useful as it provides a clear insight into the operational efficiency and profitability of the business, independent of how the company is financed.

When calculating the present value, these future cash flows are discounted back to their present value using an appropriate discount rate, typically the weighted average cost of capital (WACC). This discounting process reflects the time value of money, which acknowledges that cash flows received in the future are worth less than the equivalent cash flows received today due to factors like inflation and investment opportunity costs.

Other options do not pertain to the direct calculation of present value in the context of cash flows. The average of past performances does not accurately represent future expectations and thus is not utilized in present value calculations. Future market trends provide insight and projections but do not directly influence the cash flow values being analyzed. Lastly, while a company’s bond yields may reflect the cost of debt, they do not constitute cash flow figures and are not involved in the present value calculation of future cash flows