Which of the following investments that pay $7,500 in 10 years will have a higher price today? Assume that both investments have equal risk. The security that earns an interest rate of 8.50%. The security that earns an interest rate of 12.75%. 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? An investment that matures in 11 years An investment that matures in 10 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. Other things remaining equal, the present value of a future cash flow decreases if the investment time period increases. 14 All other things being equal, the numerical difference between a present and a future value corresponds to the amount of interest earned during the deposit or investment period. Each line on the following graph corresponds to an interest rate: 0%, 9%, or 17%. Identify the interest rate that corresponds with each line. ols UE (Dollars) 0 1 2 5 6 7 8 9 10 TIME (Years) Line A: Line B: Line C: 17% 9% 0% Investments and loans base their interest calculations on one of two possible methods: the interest and the interest methods. Both methods apply three variables--the amount of principal, the interest rate, and the investment or deposit period-to the amount deposited or invested in order to compute the amount of interest. However, the two methods differ in their relationship between the variables. OCT 4 14