Explain Intuitively Why It Is That Present Values Decrease as the Discount

question 71

Essay

Explain intuitively why it is that present values decrease as the discount rate increases.

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Definitions:

Respondeat Superior

A law principle stating that an employer or a principal is legally liable for the improper actions of an employee or agent, provided those actions took place during the course of their employment or agency.

Tort

A civil wrong or injury, other than a breach of contract, for which the law provides a remedy in the form of damages to the injured party.

MBCA

Model Business Corporation Act, a set of model laws to standardize legislation governing corporations in the U.S.

Mandatory Indemnification

A legal requirement for a party to compensate for loss or damage incurred by another, often found in corporate bylaws and insurance policies.