Given a constant future value and discount rate, an increase in the number of time periods will _____ the present value.
A) Decrease
B) Either not affect or decrease
C) Not affect
D) Either increase or not affect
E) Increase

Question

Quizplus · Accepted Answer

Increasing the number of time periods while keeping the future value and discount rate constant will decrease the present value. This is because the present value is inversely related to the number of time periods when discounting a future amount; the further in the future the amount is received, the less it is worth in present terms.

Given a Constant Future Value and Discount Rate, an Increase