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Assume that you are promised $100 three years from now. What happens to the future value of this promise six years from now (FV6) if
Assume that you are promised $100 three years from now. What happens to the future value of this promise six years from now (FV6) if you increase the discount rate r ? What happens to the Present Value ( PV0 ) of this promise if you increase the discount rate r ? FV6 decreases, PV0 decreases FV6 increases, PV0 increases FV6 decreases, PVO increases FV6 increases, PVo decreases
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