The present value of $100,000 at 5% to be received at the end of ten years will be greater than the present value of $100,000 at 6% to be received at the end of ten years.

Question

Quizplus · Accepted Answer

The present value decreases as the discount rate (interest rate) increases, so a lower rate (5% vs. 6%) results in a higher present value for the same future amount and time period.

The Present Value of $100,000 at 5% to Be Received