The present value of a future payment is higher the longer the period of time until the payment, ceteris paribus.

Name: The present value of a future payment is higher the longer the period of time until the payment, ceteris paribus.
Brand: Quizplus
Rating: 4.9 (40 reviews)

Question

Quizplus · Accepted Answer

This is because the longer the period of time until the payment, the more time there is for interest to accrue on the invested funds. Therefore, the present value of the future payment must be higher in order to account for the interest that can be earned over time.

The Present Value of a Future Payment Is Higher the Longer