3. Present value Finding a present value is the reverse of finding a future value Discounting is the process of caloulating 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 $8,500 in seven years will have a lower price today? 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? O An investment that matures in five years O An investment that matures in six years Which of the following is true about present value calculations? O Other things remaining equal, the present value of a future cash flow increases if the investment time period increases period increases. e to search