Higher interest rates (discount rates) reduce the present value of amounts to be received in the future.

Name: Higher interest rates (discount rates) reduce the present value of amounts to be received in the future.
Brand: Quizplus
Rating: 4.9 (43 reviews)

Question

Quizplus · Accepted Answer

This is because higher discount rates reflect a higher opportunity cost of having money tied up in an investment rather than having it immediately available. Therefore, the future amount must be discounted more heavily to reflect the higher cost of waiting.

Higher Interest Rates (Discount Rates) Reduce the Present Value of Amounts