(a) If the discount rate that is used to calculate the present value of a debt obligations...

Question:

(a) If the that is used to calculate the present value of a debt obligation’s cash flow is increased, what happens to the price of that debt obligation?
(b) Suppose that the used to calculate the present value of a debt obligation’s cash flow is x%. Suppose also that the only cash flows for this debt obligation are $200,000 four years from now and $200,000 five years from now. For which of these cash flows will the present value be greater? Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...