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This paper shows that small changes in even slightly negative discount rates can cause substantial changes in present value. Small changes in the discount rate, which may seem appropriate, turn out to have huge effects on present value and are not economically justified. This paper also points out problems associated with large negative discount rates. It is shown that the present value can become discontinuous as the discount rate is lowered and that the present value of the risky cash outflows becomes erratic depending on whether the outflow is discounted an even or odd number of periods. IntroductionThis paper presents a new look at the shortcomings of risk-adjusted discount rates and demonstrates that the problems with risk-adjusted discount rates are greater than the literature heretofore has revealed. Present values are shown to be hypervolatile as the discount rate becomes negative, leading to unreliable decision making. It is also shown that the present value

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