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

Question

Quizplus · Accepted Answer

The present discounted value increases when the payment itself increases because the future cash flow is larger, leading to a higher present value when discounted.

The Present Discounted Value of a Future Payment Becomes Larger