Asked by
Ashley Coplan
on Dec 11, 2024Verified
The present value of $1 million to be received in the future will
A) increase if the interest rate rises.
B) increase if the payment is received at a more distant time in the future.
C) be greater than $1 million.
D) increase if the interest rate were to fall from 8 percent to 4 percent.
Present Value
The current worth of a future sum of money or stream of cash flows given a specified rate of return.
Interest Rate
The percentage charged by a lender to a borrower for the use of assets, reflecting the cost of borrowing money.
Future Payment
A payment that is scheduled to be made at a specified date in the future.
- Fathom the linkage between interest rates and the present value of prospective earnings.
Verified Answer
TH
Learning Objectives
- Fathom the linkage between interest rates and the present value of prospective earnings.