Assuming that interest rates are positive, the present value of an $80 barrel of oil in two years is less than an $80 barrel today.

Question

Quizplus · Accepted Answer

The present value of future cash flows (like the value of an $80 barrel of oil in two years) is discounted back to the present value at the current interest rate. If interest rates are positive, the present value of future cash flows will be less than their future value, meaning an $80 barrel of oil today is worth more than an $80 barrel of oil in two years.

Assuming That Interest Rates Are Positive, the Present Value of an $80