Present value

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

Which of the following investments that pay will $$10,500$ in $13$ years will have a lower price today? $4065800$

The security that earns an interest rate of $21\mathrm{.}75\%.$

The security that earns an interest rate of $14\mathrm{.}50\%.$

Eric wants to invest in government securities that promise to pay $$1,000$ at maturity. The opportunity cost $($interest rate$)$ of hold $13\mathrm{.}80\%.$ Assuming that both investments have equal risk and Eric's investment time horizon is flexible, which of the following inv exhibit the lower price?

An investment that matures in three years

An investment that matures in four 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 investment time period increases.