QUESTION THREE $(25$ Marks$)$

$3\mathrm{.}1$ You are considering an investment opportunity that promises to pay you R$10,000$ in exactly $3$ years. If

the annual interest rate is $5\%,$ what is the present value of this

investment?

$(4)$

$3\mathrm{.}2$ You deposit R$5,000$ into a savings account that pays an annual interest rate of $8\%.$ How much will you

have in the account after $5$ years?

$(3)$

$3\mathrm{.}3$ You are offered an investment that will double your money in $10$ years. What is the implied interest rate

of this investment?

$(6)$

$3\mathrm{.}4$ You invest R$20,000$ in a bond that promises to triple your money. If the bond pays an annual interest rate

of $10\%,$ how long will it take for your investment to triple?

$(6)$

$3\mathrm{.}5$ Explain in detail why understanding the concept of time value of money is essential for financial decision

making.

$(6)$