ou are given two choices of investments, Investment A and Investment B. Both investments have the same future cash flows. Investment A has a discount rate of 5%, and Investment B has a discount rate of 7%. Which of the following is true?

Select one:

a.

The present value of cash flows in Investment A is equal to the present value of cash flows in Investment B.

b.

The present value of cash flows in Investment A is higher than the present value of cash flows in Investment B.

c.

The present value of cash flows in Investment A is lower than the present value of cash flows in Investment B.

d.

No comparison can be made - we need to know the cash flows to calculate the present value.