Which of the following statements is true with respect to the present value of a future amount?
A) The higher the discount rate, the higher the present value of a single sum for a given time period.
B) The relation between present value and time is exponential.
C) The greater the time period, the higher the present value of a single sum for a given interest rate.
D) The lower the discount rate, the lower the present value of a single sum for a given time period.

Question

Quizplus · Accepted Answer

The relation between present value and time is exponential because the present value is calculated using the formula PV = FV / (1 + r)^n, where PV is the present value, FV is the future value, r is the discount rate, and n is the number of periods. This formula shows an exponential relationship between the present value and time.

Which of the Following Statements Is True with Respect to the Present