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Increased discount rates in a cash flow stream.

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What happens to the present value of a cash flow stream when the discount rate increases? Place this in the context of an investment. If the required return on an investment goes up but the expected cash flows do not change, would you be willing to pay the same price for the investment or would you pay more or less for this investment than before interest rates changed?

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What happens to the present value of a cash flow stream when the discount rate increases? Place this in the context of an investment. If the required return on an investment goes up but the expected cash flows do not change, would you be willing to pay the same price for the investment or would you pay more or less for this investment than before interest rates changed?

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Edwin Sinclar, MBA
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  • MBA, Aspen University
  • Bachelor of Science , Berea College
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