present value of a future sum decreases as either the discount rate or the number of periods per year increases, other things held constant.

Question

Quizplus · Accepted Answer

This is because a higher discount rate reflects a higher opportunity cost for waiting to receive the future sum, and more periods per year means that each period's discounting is a smaller proportion of the total discounting over time, which also reduces the present value of the future sum.

Present Value of a Future Sum Decreases as Either the Discount