As the time period until receipt increases, the present value of an amount at a fixed interest rate
A) decreases.
B) remains the same.
C) increases.
D) Not enough information to tell.

Question

Quizplus · Accepted Answer

This is due to the time value of money principle, which states that the earlier you receive money, the more valuable it is because you can invest it and earn interest. Therefore, as the time period until receipt increases, the present value of an amount at a fixed interest rate decreases.

As the Time Period Until Receipt Increases, the Present Value