6. Present value Finding a present value is the reverse of finding a future value. is the process of calculating the present value of a cash flow or a series of cash flows to be Compounding une. Discounting Which of the following investments that pay will $5,500 in 14 years will have a higher price today? Assume that both investments have equal risk. O The security that earns an interest rate of 13.00% O The security that earns an interest rate of 19.50% 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 8.20 Assuming that both investments have equal risk and Eric's investment time horizon is flexible, which of the following investment options w exhibit the lower price? O An investment that matures in six years O An investment that matures in five 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 discount rate increases. O other things remaining equal, the present value of a future cash flow decreases if the discount rate increases