The longer the period of time until receiving a future amount of money, the more interest that can be earned, so the larger the discount factor.

Name: The longer the period of time until receiving a future amount of money, the more interest that can be earned, so the larger the discount factor.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

The larger the discount factor, the smaller the present value of a future amount of money, because a larger discount factor implies a lower interest rate or a shorter time period, not more interest earned.

The Longer the Period of Time Until Receiving a Future