You observe the present value of a future amount just fell this means

A. The future amount just rose
B. The interest or discount rate just fell
C. The interest or discount rate just rose
D. This must be a bad investment

I suggest you start by writing down the formula that relates PV to FV and interest rate:



For PV to fall either the numerator of the right hand side of this equation must decrease or the denominator must increase. Which of the choices A-D does that?

Quote:

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Originally Posted by tclough

You observe the present value of a future amount just fell this means

A. The future amount just rose
B. The interest or discount rate just fell
C. The interest or discount rate just rose
D. This must be a bad investment

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Should be C here. But it does not necessarily mean that interest is the only factor. It might be tax changes too and possibly others.