At any fixed interest rate, an increase in time, n, until a payment is made:
A)Increases the present value
B)Has no impact on the present value since the interest rate is fixed
C)Reduces the present value
D)Affects only the future value

Question

Quizplus · Accepted Answer

An increase in time until a payment is made reduces the present value because the present value is calculated by discounting future payments, and the longer the time period, the greater the discounting effect.

At Any Fixed Interest Rate, an Increase in Time, N