INSTRUCTIONS: For each of the statements (or questions) below, in two or three well-written sentences, explain succinctly and cogently why that statement is FALSE (or incorrect). Please focus specifically on what makes the statement WRONG.

7. Hard Steel Company is considering whether to build a new steel mill. If the interest rate rises after Hard's initial calculations, the present value of the returns from the mill will rise. Consequently, Hard Steel is more likely to build the mill, anticipating higher profits. 8. You will receive $3500 at some unknown time in the future. Will the two circumstances described in the next sentence unambiguously increase the present value of this future payment? (1) Interest rates rise and (2) you get the $3500 payment sooner