Which One of the Following Will Increase the Present Value

question 33

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 the above

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Definitions:

Stimulus Package

A set of government spending policies or tax cuts designed to boost economic activity and stimulate growth during or after a recession.

Unemployment Rate

The ratio of workers in the labor force who are unemployed and on the hunt for a job.

Inflationary Pressure

Situations or conditions that lead to an increase in prices across the economy, possibly reducing the purchasing power of money.

Market Interest Rate

The prevailing rate of interest available in the loanable funds market, influenced by supply and demand for credit, central bank policy, and investors’ expectations.