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Present value of the lump sum to be worth less

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Consider a LUMP SUM of cash to be received at some point in the future. All other things held equal, which of the following statements is MOST correct?

An increase in the DISCOUNT RATE will cause the PRESENT VALUE of the lump sum to be worth less.

For a given (and known) present value, an increase in the COMPOUNDING RATE of interest will cause the FUTURE VALUE to be worth more.

Given a constant interest rate, an increase in the number of compounding (or discounting) periods PER YEAR will cause the PRESENT VALUE to be worth LESS and the FUTURE VALUE to be worth MORE.

All three of the previous statements are TRUE.

NONE of these statements is true.

Reference no: EM132390664

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