All else equal, the present value of a sum of money will be smaller the larger the interest rate.

Name: All else equal, the present value of a sum of money will be smaller the larger the interest rate.
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Question

Quizplus · Accepted Answer

This statement is true because a higher interest rate means that money will earn more in the future, so its present value will be lower. In other words, the higher the interest rate, the less valuable money is today.

All Else Equal, the Present Value of a Sum of Money