A couple is arguing about whether to buy a luxury wedding ring for the guy, which costs $1,500, or to buy a not so fancy ring on Amazon for $8.99. The guy is expected to wear a ring for the next 60 years. The luxury ring will last for the entire 60-year period, while the Amazon ring will need to be replaced every two months during the 60-year period. The couple needs to make a decision immediately and will make the payment for either ring today. (If the Amazon ring is purchased, the couple will buy a new ring of equal value ($8.99) every two months for the next 60 years.) Assume Amazon will never change the price of the ring.

Please advise the couple which purchase makes more economic sense (i.e., cheaper) based on an annual discount rate of 3.8%.

Please advise the couple which purchase makes more economic sense (i.e., cheaper) based on an annual discount rate of 3.8%.

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