As long as the interest rate is greater than zero, the present value of a single sum will always:
A) Increase as the interest rate increases.
B) Be less than the future value.
C) Decrease as the period of time decreases.
D) Equal the future value if the time period is one year.
E) Increase as the number of periods increases.

Question

Quizplus · Accepted Answer

The present value of a single sum is always less than its future value when the interest rate is greater than zero, because the future value includes interest earned over time, while the present value represents the current worth of that future sum, discounted by the interest rate over the period until it is received.

As Long as the Interest Rate Is Greater Than Zero