When Dealing with Present Value, a Higher Interest Rate

question 44

Multiple Choice

When dealing with present value, a higher interest rate:

• A)does not effect the present value of the future amount.
• B)increases the present value of a future amount.
• C)decreases the present value of a future amount.
• D)none of the statements associated with this question are correct.

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Definitions:

Trade Acceptance

A written instrument, drawn by the seller on the buyer, who accepts it, indicating the buyer’s commitment to pay the seller for goods at a future date.

Domestic Sale

A commercial transaction involving goods or services that takes place within the same country.

Specified Amount

denotes a particular sum of money that is clearly stated in a contract or agreement.

Draft

An initial version of a document or plan that is subject to revisions and improvements.