Which of the Following Investments Has a Higher Present Value,assuming

question 93

Multiple Choice

Which of the following investments has a higher present value,assuming the same (strictly positive) interest rate applies to both investments?

• A)Investment X has a higher present value.
• B)Investment Y has a higher present value.
• C)Investment X and Investment Y have the same present value,since the total of the cash flows is the same for both.
• D)Investment Y has half the present value of Investment X.
• E)No comparison can be made - we need to know the interest rate to calculate the present value.

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Definitions:

Negotiation

A discussion aimed at reaching an agreement.

Transfer

The act of moving assets, rights, or obligations from one party to another through sale, gift, or other means.

Possession

The control or ownership of something, whether personal property or real estate.

Demand Instrument

A financial document requiring payment to the holder on demand.