This common unit is usually taken as a dollar in the first year of a project. All other cash flows are converted to it. You probably studied, or will probably study, cost of capital in finance courses. In addition, the discount rate reflects the risk that project costs will exceed the forecasts, or that the hoped-for future returns will not be realized. That would be correct only if the cost and the benefit occurred at the same time.
Most projects involve more than two years.
We can apply the above formula repeatedly to get the present value of a future flow two, three, or more years into the future. This can cause some confusion. Dollars in the first year are usually our common currency unit. If you understand what the formula is trying to accomplish you won't go wrong. If you forget these formulas, all is not lost.