The Net Present Value of $1,000 Received at a Time

question 2

Multiple Choice

The net present value of $1,000 received at a time in the future would

• A) decline if the $1,000 were received sooner.
• B) increase if the delivery date for the $1,000 were set farther into the future.
• C) increase if the interest rate rose.
• D) increase if the interest rate fell.

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Definitions:

Parity Ratio

A measurement comparing the value of one set of goods, services, or income to another, typically used in agricultural economics or international trade.

Parity Price

A price level that ensures the purchasing power of a commodity is maintained relative to an index or standard, often used in agricultural policy.

Base Period

A specific time period against which economic indicators or financial indexes are measured to assess changes over time.

Index of Prices

A statistical measure that shows changes in the price level of a selected basket of goods and services over time.