The present value of an amount to be received in five years is exactly twice as large as the present value of an equal amount to be received in ten years.

Question

Quizplus · Accepted Answer

The present value of a future amount is inversely proportional to the time period. Thus, if an amount is to be received in five years, its present value will be larger than the present value of an equal amount to be received in ten years. This means that the statement is false, and the present value of an amount to be received in five years cannot be exactly twice as large as the present value of an equal amount to be received in ten years.

The Present Value of an Amount to Be Received in Five