Answer:
Decrease in the interest rate
Explanation:
Present value is the sum of discounted cash flows
let me use an example to illustrate
the present value of $100 in year 0 discounted at 6% = $100
the present value of $100 one year from now discounted at 6% = $94.33
the present value of $100 two years from now discounted at 6% = $89
We can see that present value decreases with an increase in time
2. the present value of $100 one year from now discounted at 6% = $94.33
the present value of $90 one year from now discounted at 6% = $84.91
We can see that present value decreases with a decrease in the future value.
3. the present value of $100 one year from now discounted at 6% = $94.33
the present value of $100 one year from now discounted at 5% = $95.24
We can see that the lower the discount rate, the higher the present value
The decrease in the Interest rate will increase the present value of a set amount to be received sometime in the future
The present value is a measure used to compute the amount which will need to be invested today to attain a particular amount on a specified date .
Usually, the higher the interest rate, the lower will be the Present value.
Also, the lower the interest rate, the higher will be the Present value.
So, therefore, the option D is correct because the decrease in the Interest rate will increase the present value of a set amount to be received sometime in the future
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