When the discount rate:
A) decreases, the present value of the future cash flow does not change.
B) decreases, the present value of any future cash flow increases.
C) increases, the present value of any future cash flow increases.
D) increases, the present value of any future cash flow does not change.

Question

Quizplus · Accepted Answer

The discount rate is used to calculate the present value of future cash flows. When the discount rate decreases, the present value of any future cash flow will increase, because it is easier to turn future money into present money.

When the Discount Rate