Which of the following statements is INCORRECT?
A)The dollar amount of a future payment is more than its present value.
B)The present value of a future payment is approximately the same as its future dollar amount.
C)The present value of a future payment is less than its future dollar amount.
D)The bigger the future payment, the more its present value, all other things held constant.

Question

Quizplus · Accepted Answer

The present value of a future payment is always less than its future dollar amount. This is because of the time value of money, where the value of money decreases over time due to inflation and the opportunity cost of not having the money available to invest or earn interest. Therefore, statement B is incorrect as it suggests that the present value and future dollar amount are approximately the same, which is not true.

Which of the Following Statements Is INCORRECT