The present value of $1 payable in the future decreases:
A)the longer time it is to be paid and the lower r is.
B)the longer time it is to be paid and the higher r is.
C)the sooner it is to be paid and the lower r is.
D)the sooner it is to be paid and the higher r is.

Question

Quizplus · Accepted Answer

The present value of future money decreases as the time until payment increases and as the interest rate (r) increases. This is because money available at the present time is worth more than the same amount in the future due to its potential earning capacity.

The Present Value of $1 Payable in the Future Decreases