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Consider the equation for present value. If you wished to increase the present value of a...

Consider the equation for present value. If you wished to increase the present value of a future amount by changing only one variable, which of the following actions should you take?

a. increase the time period

b. decrease the future value

c. decrease the interest rate

d. this statement cannot be answered with the information provided

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Answer #1

The answer is option c [ decrease the interest rate ]

Explanation : If the interest rate is decreased the future value will be discounted to the present value at a lower rate and thus the present value will increase as compared to the present value which was discounted with the higher interest rate.

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