The present value of future payments depends on:

Question

Quizplus · Accepted Answer

The present value of future payments depends on the interest rate. This is because the interest rate determines the value of money over time. A higher interest rate will result in a lower present value of future payments, while a lower interest rate will result in a higher present value of future payments. Choice A is incorrect because whether the payment is interest or dividends does not affect how the present value is calculated. Choice B is incorrect because the marginal propensity to save is a concept related to consumption, not the present value of future payments. Choice D is incorrect because sunk costs are costs that have already been incurred and are not relevant to calculating present value.

The Present Value of Future Payments Depends On