The Present Discounted Value of a Future Payment Becomes Larger

question 64

Multiple Choice

The present discounted value of a future payment becomes larger when

• A)the nominal interest rate increases.
• B)the payment is made later.
• C)the payment itself increases.
• D)all of the above
• E)none of the above

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Definitions:

Contract Formation

The process by which parties agree on the terms of a contract, leading to a binding agreement; typically involves offer, acceptance, consideration, and mutual intent.

Past Consideration

A concept in contract law that refers to a benefit or act that has already been given or performed before the promise is made, which is not valid consideration for a current contract.

Bilateral Contract

An agreement involving two parties where each promises to perform an act in exchange for the other's act.

Return Promise

An agreement in a contract where one party promises to perform an action in response to the performance of a second party.