The present discounted value of a future payment becomes smaller when
A)the nominal interest rate decreases.
B)the payment is made sooner rather than later.
C)the payment itself decreases.
D)all of the above
E) none of the above

Question

Quizplus · Accepted Answer

The present discounted value decreases when the payment itself decreases, as the value is directly proportional to the size of the payment.

The Present Discounted Value of a Future Payment Becomes Smaller