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:

Sub-Contracting

The process of outsourcing specific portions of a project or job to specialized third parties while retaining overall responsibility for completion.

Discount Rate

Employed in discounted cash flow analysis, this interest rate is used for determining the current value of cash flows that will be received in the future.

Annual Payments

Regular payments made once a year, often associated with loan repayments or insurance premiums.

Discount Rate

This is the discount rate used in the process of DCF to calculate the present value of cash flows that are to be received in the future.