Which of the following is true of the present value of an investment?
A)The higher the rate of interest the higher will be the present value of an investment.
B)Present value of an investment is an increasing function of the time period of investment.
C)The longer the time period of investment the lower will be its present value.
D)Present value falls less than proportionately with the length of the delay in payment.

Question

Quizplus · Accepted Answer

The present value of an investment decreases as the time period of the investment increases, due to the concept of time value of money. This means that money available at the present time is worth more than the same amount in the future due to its potential earning capacity.

Which of the Following Is True of the Present Value