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 received in the future. Which of the following investments that pay will $17,500 in 8 years will have a lower price today? The security that earns an interest rate of 4.00%. The security that earns an interest rate of 6.00%. 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 5.40%. Assuming that both investments have equal risk and Eric's investment time horizon is flexible, which of the following investment options wil exhibit the lower price? An investment that matures in four years An investment that matures in five years Which of the following is true about present value calculations? There are two categories of cash flows: single cash flows, referred to as "lump sums," and annuities. Based on your understanding of annuities, answer the following questions. Which of the following statements about annuities are true? Check al/ that apply. An annuity due is an annuity that makes a payment at the beginning of each period for a certain time period. An annuity is a series of equal payments made at fixed intervals for a specified number of periods. Ordinary annuities make fixed payments at the beginning of each period for a certain time period. An annuity due earns more interest than an ordinary annuity of equal time. Which of the following is an example of an annuity? A lump-sum payment made to a life insurance company that promises to make a series of equal payments later for some period of time An investment in a certificate of deposit (CD) Ashley has a large and growing collection of animated movies. She wants to replace her old television with a new LCD model, so she has started saving for it. At the end of each year, she deposits $1,620 in her bank account, which pays her 10% interest annually. Ashley wants to keep saving for two years and then buy the newest LCD model that is available. Ashley's savings are an example of an annuity. How much money will Ashley have to buy a new LCD TV at the end of two years? $3,742.20 $3,402.00 $2,891.70 $2,811.57 If Ashley deposits the money at the beginning of every year and everything else remains the same, she will save by the end of two years