Answered

Discover how IDNLearn.com can help you find the answers you need quickly and easily. Find the answers you need quickly and accurately with help from our knowledgeable and experienced experts.

Select the statement that correctly explains the relationship between interest rates and present or future value.

a. Assuming other variables stay the same, if the interest rate increases, the present value of an investment decreases.
b. The interest rate and the present value of an investment are directly related.
c. Assuming other variables stay the same, if the interest rate increases, the future value of an investment decreases.
d. Assuming other variables stay the same, if the interest rate decreases, the present value of an investment decreases.

Sagot :

Zvikoidn

Answer:

a. Assuming other variables stay the same, if the interest rate increases, the present value of an investment decreases.

Explanation:

As the Interest rate increases, the Future Cash Flows have to be discounted back by large amounts of interest this gives a smaller Present Value.

Therefore,

The correct relationship is a. Assuming other variables stay the same, if the interest rate increases, the present value of an investment decreases.

Thank you for joining our conversation. Don't hesitate to return anytime to find answers to your questions. Let's continue sharing knowledge and experiences! Thank you for choosing IDNLearn.com. We’re committed to providing accurate answers, so visit us again soon.