Question: Q5 B. (20 Marks) a) For a given time period the higher the interest rate, the higher the present value. True or False? Give example

Q5 B. (20 Marks) a) For a given time period the higher the interest rate, the higher the present value. True or False? Give example to justify your answer. (8 Marks) - b) In order to avoid estate taxes, your rich Uncle Tom will pay you $10,000 per year for 4 years, starting 1 year from now. What is the present value of your benefactor's planned gifts? The interest rate is 7%. How much will you have 4 years from now if you invest each gift at 7%? Show your workings and the formulas. (12 Marks)

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