Higher discount rates imply that
A)present payoffs are equal to the past payoffs.
B)both present and future payoffs are equally unimportant.
C)future payoffs are more important than present payoffs.
D)present payoffs are more important than future payoffs.

Question

Quizplus · Accepted Answer

A higher discount rate implies that present payoffs are more important than future payoffs. This is because a higher discount rate reflects a higher opportunity cost of not having the money available to invest or spend today. In other words, a higher discount rate reflects a preference for receiving money sooner rather than later. Therefore, choice D is the best answer.

Higher Discount Rates Imply That