Suppose that r and t are greater than zero, which statement is correct?
A) Present value interest factors are less than one.
B) Only Future value interest factors are less than one.
C) Only Present value interest factors are greater than future value interest factors.
D) Only Present value interest factors grow as t grows, provided r is held constant.
E) Present value interest factors are negative.

Question

Quizplus · Accepted Answer

Present value interest factors (PVIF) are calculated as 1 / (1 + r)^t, where r is the interest rate and t is the time period. Since r and t are greater than zero, the denominator is always greater than one, making the PVIF less than one.

Suppose That R and T Are Greater Than Zero, Which