Asked by Chris Leggio on Jul 24, 2024
Verified
An increase in the discount rate will result in an increase in the present value of a given cash flow.
Discount Rate
The interest rate used in discounting future cash flows to present value, often reflecting the cost of capital or risk level.
Present Value
The current worth of a future sum of money or stream of cash flows given a specified rate of return, used in evaluating investment opportunities.
- Understand the effect of discount rates on the current value of future cash flows.
Verified Answer
SS
Shivani SrivastavaJul 28, 2024
Final Answer :
False
Explanation :
An increase in the discount rate will decrease the present value of a given cash flow.
Learning Objectives
- Understand the effect of discount rates on the current value of future cash flows.