Using a discount rate of 14 percent, the present value of a $10,000 benefit received five years from now is $5,500.49.

Question

Quizplus · Accepted Answer

According to the present value formula, the present value of a benefit received in the future decreases as the discount rate increases. Therefore, if the present value is $5,500.49 with a discount rate of 14 percent, it should be higher with a lower discount rate. Therefore, the statement is not true and the answer is B.

Using a Discount Rate of 14 Percent, the Present Value