As the discount rate increases without limit,the present value of the future cash inflows A) Gets larger without limit. B) Stays unchanged. C) Approaches zero. D) Gets smaller without limit,i.e. ,approaches minus infinity. E) Goes to e^rn.

Question

Quizplus · Accepted Answer

As the discount rate increases without limit, the present value of future cash inflows approaches zero. This is because a higher discount rate reduces the value of future cash flows, making them less valuable in today's dollars. Eventually, the discount rate becomes so high that the present value of future cash flows approaches zero.

As the Discount Rate Increases Without Limit,the Present Value of the Future