00:01
Okay, the question says that if we are about to receive a $300 ,300 one year from now, then if during the year the interest rate rises, whether this will lead to the increase in our present value of the future payment or not.
00:17
This statement is false.
00:19
The answer is false.
00:20
Let's understand it with the help of an example where we take our future value, that is we are about to receive.
00:32
How much? $300? one year from now, therefore the time or we can say n is one year.
00:43
And let's take the two interest rate for understanding this.
00:47
Now the first interest rate will be of 10 % and others should be higher than that.
00:54
That is 20%.
00:56
So under these two circumstances, let's see what is the effect on the present value of a future payment.
01:03
Now, at 10 % interest, one calculation will be done and at 20 % interest other calculation will be done...