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1,You have decided that you when you retire 40 years from now, you want to buy...

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

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Answer #1

Questiam 1 Calculation of Amount To be Inuested Today Grinen future Value = $ 1.00.000 Time = 40 years (cost at year 400) A I

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