When dealing with present value,a higher interest rate:
A) does not affect the present value of the future amount.
B) increases the present value of a future amount.
C) decreases the present value of a future amount.
D) None of the statements associated with this question are correct.

Question

Quizplus · Accepted Answer

A higher interest rate decreases the present value of a future amount because the higher the interest rate, the more valuable the currency in the present time. Therefore, the future amount will have a lower present value.

When Dealing with Present Value,a Higher Interest Rate