Which One of the Following Will Increase the Present Value

question 48

Multiple Choice

Which one of the following will increase the present value of an annuity, other things equal?

• A)increasing the interest rate
• B)decreasing the interest rate
• C)decreasing the number of payments
• D)decreasing the amount of the payment

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Definitions:

Dividend

A disbursement by a company to its shareholders, often from its profit reserves.

Growth Rate

The rate at which a company's earnings, revenue, or another financial metric increases over a specific period.

Cost of Preferred Stock

The required rate of return by investors for owning preferred stock in a company.

Market Rate of Return

The average or expected rate of return on an investment in the market.