Problem: Your uncle has given you three alternatives for your inheritance. You can have $5,000 now; $1,000 per year for the next eight years; or $12,000 at the end of eight years. You assume that you could earn 11% interest annually.
1. Which inheritance alternative would be best? Why?
2. Would your decision be different if you could earn interest at 12%?
3. Given the Rule of 72, determine how long it would take an investment to double under the following assumed interest rates:
- 16%
- 14%
- 12%
- 8%
- 4%