Answer: discount rate.

He needs to figure out how much the trip will cost in one year, and use the 5% as a discount rate to convert the future cost to a present value. Thus, in this context the rate is best viewed as a discount rate. **Key Concepts:** - **Discount Rate**: Used to calculate the present value of future cash flows - **Present Value Calculation**: PV = FV / (1 + r)^n where r is the discount rate - **Context**: Since Selmer needs to determine how much to set aside today for a future expense, he needs to discount the future cost back to present value using the 5% interest rate as the discount rate - **Opportunity Cost**: Refers to the value of the next best alternative foregone, not directly applicable here - **Required Rate of Return**: The minimum return an investor expects to achieve, not relevant for this simple savings calculation

Author: LeetQuiz Editorial Team