A lower discount rate applied to a given flow of returns in the future
A) remain unchanged if the future dollars do not change.
B) increase.
C) decrease.
D) change in a direction that cannot be determined in general.
e.g., $5,000 at the end of 5 years, $10,000 at the end of 10 years, $15,000 at the end of 15 years, etc.) will cause the present value of that flow to:

Question

Quizplus · Accepted Answer

A lower discount rate increases the present value of future cash flows because it reduces the rate at which those cash flows are discounted back to their present value.

A Lower Discount Rate Applied to a Given Flow of Returns