The options for the first portion are discounting or compounding

3. 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 received in the future. Which of the following investments that pay will $9,500 in four years will have a lower price today? The security that eams an interest rate of 7.00% O The security that eams an interest rate of 10.50%. Eric wants to invest in govemment securities that promise topay $1,00D at maturity. The opportunity cost (interest rate) of holding the security is 9.60%. 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 ive 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 decreases if the investment time period increases other things remaining equal, the present value of a future cash flow increases if the investment time periood increases