The shorter the length of time between a present value and its corresponding future value,
A) the lower the present value, relative to the future value.
B) the higher the present value, relative to the future value.
C) the higher the interest rate used in the present-valuation.
D) none of the other answers are correct

Question

Quizplus · Accepted Answer

The shorter the time between a present value and its corresponding future value, the less time the present value has to earn interest or returns. As a result, the present value must be higher in order to reach the same future value as it would if there were more time to earn returns. Therefore, the higher present value relative to the future value is the correct answer.

The Shorter the Length of Time Between a Present Value