Variable Relationships and Present Value

Consider an investment that promises a single cash flow of $1000 in 5 years. Assume semi-annual compounding (m=2) with an annual interest rate of 12%. Calculate the present value.

Now increase the compounding periods per year using monthly compounding (m=12). Solve for the present value.

Which of the following are true?

		When the compounding periods per year increases, the future value decreases
		When the compounding periods per year increases, the present value increases
		When the compounding periods per year increases, the present value is unchanged
		When the compounding periods per year increases, the present value decreases