Which One of the Following Will Increase the Present Value

question 27

Multiple Choice

Which one of the following will increase the present value of a lump sum future amount? Assume the interest rate is a positive value and all interest is reinvested.

• A)Increase in the time period
• B)Increase in the interest rate
• C)Decrease in the future value
• D)Decrease in the interest rate
• E)None of these

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Definitions:

Tradeoff

A choice in which taking or maximizing one benefit requires either accepting a cost or sacrificing another benefit.

Delay of Gratification

The act of resisting an immediate reward in preference for a later reward.

Locus of Control

A psychological concept referring to the extent to which individuals believe that they have control over the events in their lives.

Political Tradeoffs

Decisions within political systems that involve sacrificing one policy goal in order to achieve another, often due to limited resources or differing priorities.