The higher the future value of the payment the:
A) lower the present value.
B) higher the present value.
C) future value doesn't impact the present value, only the interest rate really matters.
D) lower the present value because the interest rate must fall.

Question

Quizplus · Accepted Answer

The higher the future value of the payment, the more valuable it is in today's dollars, so the present value will be higher. This is because of the time value of money: money today is worth more than the same amount of money in the future, due to the ability to earn interest on it. Therefore, a larger future payment will have a higher present value.

The Higher the Future Value of the Payment The