a) Computation of amount to be invest now to raise money of RM100,000 after 18 years:

Using the

Future value = Present value * (1+r)ⁿ

Present value = Future value / (1+r)ⁿ

Present value = RM100,000 / (1+0.06)^18years

= RM100,000 / 1.06¹⁸

= RM100,000 / 2.8543

= RM35,034.40

Therefore, Mr. Lee has to invest RM35,034.40 at interest rate of 6%p.a for 18 years then he will get RM100,000 for his son Private University fee.

b) How many year will take to double the salary, when salary increase by 6% p.a:

Using same formula;

Future value = Present value*(1+r)ⁿ

Let, take salary as RM5000 per year then future value will be RM10,000

RM10,000 = RM5,000*(1+0.06)ⁿ

(1+0.06)ⁿ = RM10,000 / RM5000

(1.06)ⁿ = 2

if, calculated the above by trail and error we get approximetly 12 years.

Therefore, if salary increases by 6%p.a the for double the salary will take 12 years.