Question

the further you go out in time. the ______ the present value.

lesser or greater? why?

Answer 1

Answer:

Lesser

Explanation:

The present value is a concept of the time value of money. Present value refers to the value of money today of any future amount.

As per the concept of 'time value of money', the amount of money we receive now is much more worth than the amount of money we would receive in the future period. This is due to the potential earning capability of money.

As we keep on going further into time, the value of money keeps on decreasing.

For example: $ 100 today is worth more than $ 100 a year from now, which is worth more than $ 100 in the next 5 years.

So, it can be concluded that the present value starts decreasing as we go further into time.

In case of any doubt, please feel free to comment.