Assignment 05 Time Value of Money Finding a present value is the reverse of finding a future value. Which of the following is true about finding the present value of cash flows? O Finding the present value of cash flows tells you how much you need to invest today so that it grows to a given future amount at a specified rate of return. O Finding the present value of cash flows tells you what a cash flow will be worth in future years at a specified rate of return. Which of the following investments that pay will $19,500 in four years will have a lower price today? The security that earns an interest rate of 11.50%. The security that earns an interest rate of 17.25%. 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 four 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 decreases if the discount rate increases. O Other things remaining equal, the present value of a future cash flow increases if the discount rate increases