# Question: a If the discount rate that is used to calculate

(a) If the discount rate that is used to calculate the present value of a debt obligation’s cash flow is increased, what happens to the price of that debt obligation?

(b) Suppose that the discount rate used to calculate the present value of a debt obligation’s cash flow is x%. Suppose also that the only cash flows for this debt obligation are $200,000 four years from now and $200,000 five years from now. For which of these cash flows will the present value be greater?

(b) Suppose that the discount rate used to calculate the present value of a debt obligation’s cash flow is x%. Suppose also that the only cash flows for this debt obligation are $200,000 four years from now and $200,000 five years from now. For which of these cash flows will the present value be greater?

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