Question

luck! Question 3 All else being equal, which of the following statement about time value of money is NOT correct? The higher the discount rate, the lower the present value The higher the interest rate, the higher the future value The higher the number of periods, the lower the present value The higher the present value, the lower the future value - Previous Quiz sa

Answer 1

solution 3:

The statement that is not correct about time value of money is "Higher the present value, lower the future value"

Hence last option is correct.

solution 4:

Future value = $10,000

Investment amount = $1,000

Rate of interest = 7%

Time = n

Now

$1,000 (1+0.07)^n = $10,000

(1.07)^n =10

On solving n= 34 years

Hence last option is correct.

Solution 5:

The invalid statement is "If the discount rate r1 is greater than zero but lower than 1%, the present value calculated using the discount rate will be greater than $1 million"

hence 3rd option is correct.