Which of the following statements is TRUE?
A)People generally prefer to receive money later rather than sooner.
B)Interest is a payment made by lenders to borrowers.
C)The present value of a future payment will be lower the smaller the payment, the later it is due, and the higher the interest rate.
D)The future value of a payment will be more if the interest rate is lower.

Question

Quizplus · Accepted Answer

This statement about present value is true due to the concept of discounting. As the payment becomes smaller or is due later, it is worth less in today's dollars and the interest rate affects how much less it is worth. A is false because people generally prefer to receive money sooner rather than later due to the time value of money. B is false because interest is a payment made by borrowers to lenders. D is false because the future value of a payment will be more if the interest rate is higher.

Which of the Following Statements Is TRUE