Question
23. You were able to buy kosher salt for 0.45 cents ten years ago; if it currently costs $1.20 what is the average inflation (interest
23. You were able to buy kosher salt for 0.45 cents ten years ago; if it currently costs $1.20 what is the average inflation (interest rate) rate for this item?
(Questions 8-9). If Melody wants to purchase a house for $370,000 and finance $110,000 with either a 7.8%, 30-year mortgage or a 6.5%, 20-year mortgage.
8. What is the effective interest rate on each of the above alternatives?
Note: Only compare the interest rates for the above two options based on monthly compounding. Please use four decimals.
A.
B.
9. Which alternative would you recommend and why?
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