As the discount rate increases without limit, the present value of the future cash inflows: gets larger without limit stays unchanged approaches zero gets smaller without limit, i.e. approaches minus infinity
Added by Yusupov A.
Step 1
The formula for calculating the present value is: Present Value = Future Cash Inflows / (1 + Discount Rate) ^ Number of Periods From this formula, we can see that as the discount rate increases, the denominator of the equation gets larger. This means that the Show more…
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