An increase in ________ will decrease present value.
A) the discount rate per period
B) the original amount invested
C) the number of periods
D) both A and C

Question

Quizplus · Accepted Answer

An increase in the discount rate per period (A) will decrease the present value because the future cash flows are discounted more heavily. Similarly, an increase in the number of periods (C) will also decrease the present value, as cash flows are discounted over a longer period, reducing their present value.

An Increase in ________ Will Decrease Present Value