Asked by
Deontrae Brown
on Nov 05, 2024
Verified
The higher the interest rate, the lower the present value.
Interest Rate
The part of a loan that is taken as interest from the borrower, customarily presented as an annual percentage of the still unpaid loan.
Present Value
The current worth of a future sum of money or stream of cash flows, given a specific rate of return.
- Comprehend the principle of present value and its sensitivity to changes in interest rates.
- Analyze how variations in interest rates influence the present value of subsequent cash flows.
Verified Answer
JM
Learning Objectives
- Comprehend the principle of present value and its sensitivity to changes in interest rates.
- Analyze how variations in interest rates influence the present value of subsequent cash flows.