Using lower discount rates will:
A) not affect the present value of the future cash flow.
B) increase the present value of any future cash flow.
C) decrease the present value of any future cash flow.
D) None of the above.

Question

Quizplus · Accepted Answer

Lower discount rates will increase the present value of any future cash flow because the lower the discount rate, the less the value of future cash flows is discounted. This means that each future cash flow will have a higher present value when using a lower discount rate.

Using Lower Discount Rates Will