Question
1. A bookstore offers you the following deal: you pay $36 today (in January) and you get 5% off the price of everything you purchase
1. A bookstore offers you the following deal: you pay $36 today (in January) and you get 5%
off the price of everything you purchase in December (for simplicity assume exactly 12
months from now). If your savings account earns 4.03% APR (compounded monthly), how
much do you have to buy in December to just break even on the offer?
2.
You expect that you will need to replace your furnace in 3 years at a cost of $16,944. How
much must you save, each month for 19 months, starting next month (the same amount
each month) if your savings account pays 2.05% APR (compounded monthly)?
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