The net present value of $100 to be received one year from now will

Question

Quizplus · Accepted Answer

The net present value of $100 to be received one year from now will decrease if the interest rate rises, making option A false. The net present value will also decrease if the payment is delayed until two years from now, making option B false. However, $100 is greater than $95, so the net present value of $100 to be received one year from now will be greater than the net present value of $95 to be received one year from now, making option C true. Finally, if the interest rate is 10 percent, the value of having $95 now would be greater than the net present value of $100 to be received one year from now, making option D false.

The Net Present Value of $100 to Be Received One