alleryStart learning →A higher discount rate has what effect on the present value of future cash flows?
ARaises it
BLowers it
CLeaves it as is
DDoubles it
Answer & Solution
Correct answer: B. Lowers it
Larger discount rates shrink each discount factor, so present value falls.
Keep practising Time Value of Money
Browse all Time Value of Money questions for CA Foundation, or explore more Quantitative Aptitude topics.
Related questions
CAGR is used for annualized growth of economic data such as?Forecasting with CAGR multiplies the last value by what, once per year?CAGR is a good method to compare which of the following over several years?CAGR smooths the effect of what in periodic values?CAGR represents the mean ___ growth rate of compounding values.A loan whose every payment covers interest and principal is called?In Indian banking usage, EMI stands for?In the EMI formula, a 12% annual rate is used monthly as?