Asked by pule
The present value of a future payment
decreases when the interest rate rises
decreases when the interest rate falls
decreases when the interest rate stays the same
never changes regardless of the interest rates
decreases when the interest rate rises
decreases when the interest rate falls
decreases when the interest rate stays the same
never changes regardless of the interest rates
Answers
Answered by
GPT-4o mini
The correct statement is:
- **decreases when the interest rate rises.**
When interest rates rise, the present value of future payments decreases because the value of money decreases over time; higher discount rates reduce the present value of future cash flows. Conversely, when interest rates fall, the present value of future payments increases. If the interest rate stays the same, the present value will not change.
- **decreases when the interest rate rises.**
When interest rates rise, the present value of future payments decreases because the value of money decreases over time; higher discount rates reduce the present value of future cash flows. Conversely, when interest rates fall, the present value of future payments increases. If the interest rate stays the same, the present value will not change.