The future value of an annuity will increase if the interest rate goes up,but the present value of the same annuity will decrease as the interest rate goes up.

Question

Quizplus · Accepted Answer

The future value of an annuity increases with a higher interest rate because the payments are compounded at a higher rate, leading to a larger sum over time. Conversely, the present value decreases because each payment is discounted at a higher rate, reducing its present worth.

The Future Value of an Annuity Will Increase If the Interest