QUESTION TWO

QUESTION TWO
You want to begin saving for your daughter’s college education and you estimate that she will need
R170 000 in 15 years. If you feel confident that you can earn 8.5% per year, how much do you
need to invest today?
2.1 (6 marks)
Suppose your company expects to increase unit sales of widgets by 16% per year for the next 6
years. If you currently sell 2 million widgets in one year, how many widgets do you expect to sell in
6 years?
2.2 (6 marks)
You are looking at an investment that will pay R1 500 in 4 years if you invest R800 today. What is
the implied rate of interest?
2.3 (8 marks)
You want to purchase a new car and you are willing to pay R400 000. If you can invest at 11% per
year and you currently have R300 000, how long will it be before you have enough money to pay
cash for the car?