If interest rates are positive, which of the following has the lowest current value?
A) $350 now
B) $350 a year from now
C) $350 two years from now
D) All of the above have the same current value.

Question

Quizplus · Accepted Answer

With positive interest rates, the value of money decreases over time due to inflation. Therefore, the further into the future the payment is, the lower its present value. So, option C ($350 two years from now) has the lowest current value.

If Interest Rates Are Positive, Which of the Following Has