An investment promises to pay you $340 per year starting in 1 year. The cash flow from the investment is expected to increase by 2 percent per year forever. If alternative investments of similar risk earn a return of 10 percent per year. Determine the maximum you would be willing to pay for the investment.

Alysha is planning to live in a university residence for three years while completing her degree. The annual cost for food and lodging is $6,480 and must be paid at the start of each school year.What is the total present value of Alyshas residence fees if the discount rate (interest rate) is 8 percent per year?

At the age of 10, Scott decided that he wanted to attend a very prestigious (and expensive) university. How much will his parents have to save each year to accumulate $37,060 by the time Scott needs the funds in eight years?Assume Scotts parents can earn 9 percent (compounded annually) on their savings, and that each years savings are deposited at the end of the year.

Stephen is 28 years old now and plans to retire in 33 years. He works in a local bank and has an annual after-tax income of $42,950. His expected annual expenditure is $34,540, and the rest of his income will be invested at the beginning of each of the next 33 years at an expected annual rate of return of 14.2 percent. Calculate the amount Stephen will have accumulated when he retires.

Alysha, a retired librarian, would like to donate some money to her alma mater to endow a $5,250 annual scholarship. The first scholarship will be awarded in 6 years. The university will manage the funds and expects to earn 3 percent per year. How much will Alysha have to donate so that the endowment fund never runs out?

Veda would like to support the education of her favourite grand-nephew, Stephen, who plans to begin university in 3 years. How much will Veda have to invest today, at 5 percent, to be able to give Stephen $5,720 at the end of each year for 4 years?

Bettys parents save $1,500 per year for 17 years to pay for her university tuition costs. They deposit the money into a Registered Education Savings Plan (RESP) account so that no tax is payable on the interest income. This RESP account provides a return of 8 percent per year.How much will Bettys account be worth when she begins her university studies.As an incentive to save for higher education, the government will add 10 percent to any money contributed to an RESP each year. Including these grants, how much will Betty have in her account?

Franklin has learned that his great-aunt intends to give him $4,740 each year he is studying at university. Tuition must be paid in advance, so Franklin would like to receive his payments at the beginning of each school year. How much will his great-aunt have to invest today at 9 percent, to make the four annual (start-of-year) payments?Assume that Franklin will be starting school in five years.

Jimmie will need $8,130 per year for four years to pay for tuition. How much will Jimmies parents have to invest at the end of each year for the 9 years before he begins his studies if their savings earn compound interest at 9 percent per year? Assume the tuition payments occur at the end of each year.