iginal value). C) The differences between the effects of discount rates become larger as the time to payment gets shorter. D) Tripling the discount rate decreases present value to a third of the original value (that is, 1/3 of the original value).
iginal value). C) The differences between the effects of discount rates become larger as the time to payment gets shorter. D) Tripling the discount rate decreases present value to a third of the original value (that is, 1/3 of the original value).
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 7P
Related questions
Question
A) A discount rate of 0% means that payments are worth the same today and at all points in future.
B) Tripling the time to payment decreases present value to a third of the original value (that is, 1/3 of the original value).
C) The differences between the effects of discount rates become larger as the time to payment gets shorter.
D) Tripling the discount rate decreases present value to a third of the original value (that is, 1/3 of the original value).
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