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1. You would like to buy a horse that is being currently being sold for $8,500, but you cannot afford it right now. However, you
1. You would like to buy a horse that is being currently being sold for $8,500, but you cannot afford it right now. However, you think that you would be able to buy it after 3 years. If the expected inflation rate as applied to the price of this horse is 7% per year, what is its expected price after three years?
2. Your bank offers two types of deposit investments, each requiring a deposit of $10,000. The first one pays $11,271.60 after 2 years, and the second one pays $12,139.47 after 3 years. Which one has the higher rate of return?
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