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

Question

Quizplus · Accepted Answer

As the discount rate decreases, the present value of a future cash flow increases because the cash flow is being discounted back to the present value at a lower rate, making it worth more in today's terms.

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