Which of the following statements is true?
A)The higher the discount rate, the higher the present value.
B)The process of accumulating interest on interest is referred to as discounting.
C)If money is worth 10% compounded annually, $1,100 due one year from today is equivalent to $1,000 today.
D)If a single sum is due on December 31, 2015, the present value of that sum decreases as the date draws closer to December 31, 2015.

Question

Quizplus · Accepted Answer

If money is worth 10% compounded annually, $1,100 due one year from today is equivalent to $1,000 today because $1,000 today compounded at 10% for one year equals $1,100.

Which of the Following Statements Is True