The present value of a dollar
1. increases as the interest rate increases
2. decreases as the interest rate increases
3. increases as the time period increases
4. decreases as the time period increases
a. 1 and 3
b. 1 and 4
c. 2 and 3
d. 2 and 4

Question

The present value of a dollar
1. increases as the interest rate increases
2. decreases as the interest rate increases
3. increases as the time period increases
4. decreases as the time period increases
a. 1 and 3
b. 1 and 4
c. 2 and 3
d. 2 and 4

anonymous · Answer

From the equation $$PVSS=FVSS[1/(1+i)^{n}]$$ Where PVSS is the present  value of a single sum and FVSS is the future value of a single sum.

We see that, as the interest rate and time period increases, the PVSS will get smaller.

So the answer is D.