As the discount rate increases, the present value of a positive cash flow to be received at a particular time in the future:
A) gets smaller without limit.
B) gets larger without limit.
C) becomes smaller
D) stays unchanged.

Question

Quizplus · Accepted Answer

As the discount rate increases, the present value of a positive cash flow to be received at a particular time in the future becomes smaller. This is because the higher discount rate means that the future cash flow is worth less in today's dollars.

As the Discount Rate Increases, the Present Value of a Positive