Answer:
D. For a higher interest rate, an annuity has a smaller future value
Explanation:
If the interest rate increases, then the capitalization factor on the annuity increases making the annuity future valeu increase:
[tex]C \times \frac{(1+r)^{time} -1}{rate} = PV\\[/tex]
on the capitalziation factor we got rate in both part of the division:
[tex]\frac{(1+r)^{time} -1}{rate}[/tex]
on the top part is being added a unit and power to t
while in the other it doesn't change.
While it is true that a higher dividend makes the quotient decrease, the increases in the top part exceeds by far the increase in the bottom part, making increase the quotient.
