For a given interest rate, as the length of time until receipt of the funds increases, the present value interest factor
A) remains unchanged.
B) changes proportionally.
C) decreases.
D) increases.

Question

Quizplus · Accepted Answer

As time increases, the present value interest factor must decrease because the longer the time until receipt of funds, the less valuable the future funds are in today's terms due to factors such as inflation and opportunity cost. Therefore, Option C, which states that the present value interest factor decreases, is the correct choice.

For a Given Interest Rate, as the Length of Time