Given some amount to be received several years in the future,if the interest rate increases,the present value of the future amount will
A) Be higher.
B) Be lower.
C) Stay the same.
D) Cannot tell.
E) Be variable.

Question

Quizplus · Accepted Answer

When the interest rate increases, the present value of future amounts decreases. This is because a higher interest rate means that you could receive a higher return by investing your money elsewhere, so the value of the future amount decreases.

Given Some Amount to Be Received Several Years in the Future,if