As the interest rate or discount rate falls, the present value of a stream of future cash flows will:
A) Increase.
B) Decrease.
C) Remain unchanged.
D) Change, but in an undetermined direction.

Question

Quizplus · Accepted Answer

When the interest rate or discount rate falls, the present value of future cash flows increases because the cash flows are discounted at a lower rate, making their present value higher.

As the Interest Rate or Discount Rate Falls, the Present