Which of the following investments has a higher present value, assuming the same (strictly positive) interest rate applies to both investments?
Year Investment X Investment Y
1 $5,000 $11,000
2 $7,000 $9,000
3 $9,000 $7,000
4 $11,000 $5,000
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. No comparison can be made - we need to know the interest rate to calculate the present value.
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