The greater the number of compounding periods within a year, then (1) the greater the future value of a lump sum investment at Time 0 and (2) the smaller the present value of a given lump sum to be received at some future date.

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Quizplus · Accepted Answer

This is due to the effect of compounding, as the more frequent the compounding periods, the greater the amount of interest earned on the investment. On the other hand, the present value of a future lump sum decreases as the discount rate (usually the interest rate) is applied more frequently.

The Greater the Number of Compounding Periods Within a Year