Asked by Chelsey Wheatley on Jun 25, 2024
Verified
Present values increase as the discount rate increases.
Present Values
This is a concept in finance that calculates the current worth of a future sum of money or stream of cash flows given a specified rate of return.
Discount Rate
This rate is applied in the framework of DCF analysis for the purpose of calculating the current value of foreseeable cash flows.
- Acquire knowledge on the role of discount rates in determining present and future values.
Verified Answer
FF
Farah FayadJun 26, 2024
Final Answer :
False
Explanation :
Present values decrease as the discount rate increases because the amount of money to be received in the future is discounted back at a higher rate, making its present value lower.
Learning Objectives
- Acquire knowledge on the role of discount rates in determining present and future values.