The present value of an investment increases as the opportunity cost rate increases.

Question

Quizplus · Accepted Answer

The present value of an investment decreases as the opportunity cost rate increases. This is because the opportunity cost rate represents the return that could be earned if the funds were invested elsewhere, so a higher opportunity cost rate means there are better alternative investments available and the present value of the original investment is worth less.

The Present Value of an Investment Increases as the Opportunity