Q 17

Higher interest rates
A)Reflect a higher opportunity cost of money.
B)Raise the present value of future payments.
C)Lower the future value of current dollars.
D)Result in a higher risk premium.

Q 18

Lower interest rates
A)Lower the present value of future payments.
B)Raise the future value of current dollars.
C)Reflect a lower opportunity cost of money.
D)Reflect a higher opportunity cost of money.

Q 19

The present discounted value of a future payment can be calculated using which of the following formulas?
A)[(1 + Interest rate)^{N}] ÷ (Current payment).
B)(Current payment)÷ [(1 + Interest rate)^{N}].
C)[(1 + Interest rate)^{N}] ÷ (Future payment).
D)(Future payment)÷ [(1 + Interest rate)^{N}].