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How are present values affected by changes in interest rates

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Reference no: EM132651006

Problem 1: A dollar paid (or received) in the future is

Option 1: not comparable to a dollar paid (or received) today.

Option 2: worth more than a dollar paid (or received) today.

Option 3: not worth as much as a dollar paid (or received) today.

Option 4: worth as much as a dollar paid (or received) today.

Problem 2: How are present values affected by changes in interest rates?

Option 1: Present values are not affected by changes in interest rates.

Option 2: The lower the interest rate, the larger the present value will be.

Option 3: One would need to know the future value in order to determine the impact.

Option 4: The higher the interest rate, the larger the present value will be.

Reference no: EM132651006

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