The present discounted value of a future payment becomes smaller when:
A) the payment itself decreases.
B) the real interest rate decreases.
C) the payment itself increases.
D) the nominal interest rate decreases.
E) the payment is made sooner rather than later.

Question

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When the payment itself decreases, the present discounted value of that future payment also decreases.

The Present Discounted Value of a Future Payment Becomes Smaller