As the interest rate increases, the present value
A) increases.
B) decreases.
C) remains the same.
D) Not enough information is given to tell.

Name: As the interest rate increases, the present value A) increases. B) decreases. C) remains the same. D) Not enough information is given to tell.
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Question

Quizplus · Accepted Answer

As the interest rate increases, the discount rate used to calculate the present value also increases. Therefore, the present value decreases as the interest rate increases.

As the Interest Rate Increases, the Present Value