2. Apple introduced iPhone 13 Pro last year. You have two options to buy the iPhone from Apple. The first option allows you to upgrade to a new unlocked iPhone Pro every year with a monthly payment of $50. This option comes with an AppleCare+ (a damage replacement plan). The second option requires you to pay $999 in front with a resale value of $650 after one year and $400 after two years. In this case, you need to pay $99 extra for the AppleCare+ each year. If you do not care whether you can have a new phone every year or every two years, you can have two choices to own an iPhone. Choice I: you can use the upgrade program; Choice II: you can pay in full in front and purchase the AppleCare+ each year. In two years, you will sell your old phone and buy a new one. Assume that you will continue with the same choice going forward. The appropriate discount rate is 6% APR on a monthly basis. (a) What is the present value of the total costs for each choice? Can you compare the PVs to make a decision, and why? (b) Which choice is the best based on the EAC approach? (c) Which choice is the best based on the matching approach? 2. Apple introduced iPhone 13 Pro last year. You have two options to buy the iPhone from Apple. The first option allows you to upgrade to a new unlocked iPhone Pro every year with a monthly payment of $50. This option comes with an AppleCare+ (a damage replacement plan). The second option requires you to pay $999 in front with a resale value of $650 after one year and $400 after two years. In this case, you need to pay $99 extra for the AppleCare+ each year. If you do not care whether you can have a new phone every year or every two years, you can have two choices to own an iPhone. Choice I: you can use the upgrade program; Choice II: you can pay in full in front and purchase the AppleCare+ each year. In two years, you will sell your old phone and buy a new one. Assume that you will continue with the same choice going forward. The appropriate discount rate is 6% APR on a monthly basis. (a) What is the present value of the total costs for each choice? Can you compare the PVs to make a decision, and why? (b) Which choice is the best based on the EAC approach? (c) Which choice is the best based on the matching approach