Given positive equal annual cash flows and a positive interest rate,the present value of an annuity will be greater than the sum of the cash flows.

Question

Quizplus · Accepted Answer

The present value of an annuity, given positive equal annual cash flows and a positive interest rate, will be less than the sum of the cash flows because each cash flow is discounted back to its present value, which reduces the amount due to the time value of money.

Given Positive Equal Annual Cash Flows and a Positive Interest