Finding a present value is the reverse of finding a future value. Discounting is the process of calculating the present value of a cash flow or a series of cash flows to be received in the future....

Finding a present value is the reverse of finding a future value. Discounting is the process of calculating the present value of a cash flow or a series of cash flows to be received in the future. Which of the following investments that pay will $11, 500 in six years will have a higher price today? Assume that both investments have equal risk. The security that earns an interest rate of 17.25%. The security that earns an interest rate of 11.50%. Eric wants to invest in government securities that promise to pay $1,000 at maturity. The opportunity cost (interest rate) of holding the security is 11.00%. Assuming that both investments have equal risk and Eric's investment time horizon is flexible, which of the following investment options will exhibit the lower price? An investment that matures in nine years An investment that matures in 10 years Which of the following is true about present value calculations? Other things remaining equal, the present value of a future cash flow increases if the discount rate increases. Other things remaining equal, the present value of a future cash flow decreases if the discount rate increases.