As the time period until receipt of an amount of money increases, the present value of the amount at a fixed interest rate
A) remains the same.
B) increases.
C) decreases.
D) Not enough information to make a decision.

Question

Quizplus · Accepted Answer

The present value of an amount of money decreases as the time period until its receipt increases, assuming a fixed interest rate. This is because money available at a future date is worth less today due to the potential earning capacity (interest) that is foregone.

As the Time Period Until Receipt of an Amount of Money