All else equal, if you expect to receive a certain amount in the future, say, R500 in ten (10) years, the present value of that future amount will be lowest if the interest earned on such investments is compounded

Question

Quizplus · Accepted Answer

The present value of a future amount is affected by the interest rate and the length of time until the amount is received. Compounding daily means that interest is added to the investment every day, resulting in a higher total amount in the future. Therefore, the present value of the future amount is lowest when the interest is compounded daily.

All Else Equal, If You Expect to Receive a Certain