The present value of a future amount of money will be greater the
A)greater the interest rate.
B)greater the amount of time before the future payment is received.
C)lower the interest rate.
D)greater the rate of the expected rate of inflation.

Question

Quizplus · Accepted Answer

The present value of a future amount is higher when the interest rate is lower because the discounting effect is less pronounced, meaning the future amount is not reduced as much when calculating its present value.

The Present Value of a Future Amount of Money Will