Final answer:
The relationship between the present value of an investment and the time period is inverse, meaning the present value decreases as the investment time period increases, adhering to the time value of money principle.
Step-by-step explanation:
The relationship between the present value of an investment and the investment time period is best described as inverse. This means that as the length of the time period increases, the present value of the investment typically decreases, given a constant interest rate. This is because present value is calculated based on the concept of time value of money, which posits that a dollar today is worth more than a dollar in the future due to its potential earning capacity.
When calculating present value, a future amount of money is discounted to reflect the opportunity cost of not having access to that money in the present. As the time period increases, the amount of discounting also increases, leading to a lower present value. This relationship is an essential concept in finance and is key to the decision-making process regarding various investment opportunities.