What Happens to the Present Value of an Annuity as the Interest

question 6

Multiple Choice

What happens to the present value of an annuity as the interest rate increases?

• A)It decreases.
• B)It stays the same.
• C)It increases.
• D)All of the above.

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Definitions:

FASB Statement No.109

A standard issued by the Financial Accounting Standards Board relating to income tax accounting.

Installment Method

A revenue recognition method that allows income to be realized at the point of sale and subsequently as payments are received.

Revenue Recognition

Accounting principle that determines the specific conditions under which income becomes realized as revenue.

Period Of Sale

The specific time during which a sale transaction is recognized in the accounting records, important for revenue recognition principles.