As the discount rate increases without limit,the present value of the future cash inflows A) Gets larger without limit. B) Stays unchanged. C) Approaches zero. D) Gets smaller without limit, i.e., approaches minus infinity. E) Goes to e^rⁿ.

Question

Quizplus · Accepted Answer

The present value of future cash inflows is calculated by discounting them using a discount rate. As the discount rate increases, the present value of future cash flows decreases. When the discount rate approaches infinity, the present value of future cash inflows approaches zero. Therefore, option C is correct.

As the Discount Rate Increases Without Limit,the Present Value of the Future