The present value of a perpetual income stream increases when the discount rate ________.
A)increases
B)decreases
C)changing unpredictably
D)increasing proportionally

Question

Quizplus · Accepted Answer

The present value of a perpetual income stream is calculated as the income divided by the discount rate. Therefore, as the discount rate decreases, the present value increases.

The Present Value of a Perpetual Income Stream Increases When