Suppose that the discount rate 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?

A$)$ The present values would only be different if the debt obligation were subject to a

change.

B$)$ Cash flows that come earlier will have a lower value. As long as $x\%$ is positive and the

amount is the same, the present value will be lower for the $$200,000$ four years from now

compared to five years from now.

C$)$ Cash flows that come earlier will have a greater value. As long as $x\%$ is positive and the

amount is the same, the present value will be greater for the $$200,000$ four years from now

compared to five years from now.

D$)$ Cash flows are the same and this is why the present value does not change.

D

B

A

C