Which of the Following Is True Regarding the Present Value

question 10

Multiple Choice

Which of the following is true regarding the present value of a future sum?

• A)The present value of a future sum decreases as either the discount rate or the number of periods per year increases.
• B)The present value of a future sum increases as either the discount rate or the number of periods per year increases.
• C)The present value of a future sum remains stable as either the discount rate or the number of periods per year increases.
• D)There is no relationship between present and future value.

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Definitions:

Price

The amount of money that must be paid to obtain a given product or service.

Opportunity Cost

The loss of potential gain from other alternatives when one alternative is chosen.

Hot Dog

A cooked sausage, traditionally grilled or steamed, and served in a partially sliced bun as a fast-food.

Hamburger

a popular food item consisting of a cooked patty of ground meat, usually beef, placed inside a sliced bread roll or bun.