Johns financial planner has recommended that john establish

Question

John's financial planner has recommended that John establish a charitable remainder annuity trust for his low basis stock in XYZ Corporation for life. John is uncertain what the effect will be upon his charitable deduction if he reserves an annuity interest of 7% vs. 5%. Which of the following statements is correct?

1. John's charitable deduction will increase in amount.
2. The present value of John's retained annuity interest will decrease in value
3. The present value of John's retained annuity interest will increase in value.
4. John will have to pay capital gains tax at the creation of the CRAT which is funded with low basis XYZ Corporation stock.