You are expecting to receive $3,500 at some time in the future.Which of the following would unambiguously increase the present value of this future payment?
A)Interest rates rise and you get the payment sooner.
B)Interest rates rise and you have to wait longer for the payment.
C)Interest rates fall and you get the payment sooner.
D)Interest rates fall and you have to wait longer to get the payment.

Question

Quizplus · Accepted Answer

The present value of a future payment increases when interest rates fall because the discount rate is lower, and receiving the payment sooner also increases its present value due to less time for discounting.

You Are Expecting to Receive $3,500 at Some Time in the Future.Which