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

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Accounting

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

3. 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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