Question

Your grandmother has promised to give you $10,000 when you graduate from college. If you speed up your graduation by one year and graduate two years from now rather than the expected three years, the present value of this gift will:________a) remains constantb) increasesc) decreasesd) becomes negativee) cannot be determined from the information provided

Answer 1

Answer:

Increases

Explanation:

The present value depends on the concept of time value of money. It states that $100 will be worth lesser after one year and even much lesser after two years, So the value of money decreases as time passes by.  So the present value will  indirectly increases if you complete your graduation in two years instead of three years