Given the formula PDV = $F/(1 + R)^T,the PDV is smaller when the number of years is ______ and when the interest rate is ______. A) smaller; lower B) smaller; higher C) larger; lower D) larger; higher

Question

Quizplus · Accepted Answer

The PDV (Present Discounted Value) decreases as the number of years increases due to the compounding effect of discounting over a longer period. It also decreases as the interest rate (R) increases, because a higher discount rate reduces the present value of future cash flows.

Given the Formula PDV = $F/(1 + R)T,the PDV Is

Given the Formula PDV = $F/(1 + R)^T,the PDV Is