Which of the following is false? A. The greater the interest rate, the greater the present...

Which of the following is false?

A. The greater the interest rate, the greater the present value, given a $100 future value and holding the time period constant.

B. The discount factor is the reciprocal of the compound factor.

C. The longer the time period, the smaller the present value, given a $100 future value and holding the interest rate constant.

D. A future dollar is always less valuable than a dollar today if interest rates are positive.

Expert Solution

Present value = Future value/(1+i)^n

i = interest rate per period

n= number of periods

choose A)

A) False, since present value and interest rate are inversely proportional

B) True, as per the formula

C) True, since present value and time period are inversely poportional

D) True, Time value of money decreases with time

jeff jeffy answered 2 years ago

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