Answer the following questions assuming the interest rate is 8 percent.
Time Value of Money Problems
e. How long will it take for a $2,000 investment to double in value?
f. What will be the value of 20 years of $500 invested at the end of each year for the next 20 years?
g. A couple wishes to save $250,000 over the next 18 years for their child’s college education. What uniform annual amount must they deposit at the end of each year to accomplish their objective?
h. How long must a stream of $600 payments last to justify a purchase price of $7,500.00? Suppose the stream lasted only five years. How large would the salvage value (liquidating payment) need to be to justify the investment of $7,500.00?