1,You have decided that you when you retire 40 years from now, you want to buy a lodge in Northern Manitoba that you believe will cost $100,000 at that time. You have found an investment opportunity that will yield an interest rate of 7.5% annually, compounded annually. How much will you need to invest now to reach your goal?

Multiple Choice

• $5,541.94

• $6,426.89

• $4,091.67

• $8,832.02

2.

All else equal, holding the interest ready steady, the further out a cash flow is, the ________ it's present value.

Multiple Choice

• higher

• lower

• same

True or false: the higher the interest rate, the higher present value will be relative to future value.

Multiple Choice

• True

• False