Question
As part of your financial planning, you wish to purchase a new car exactly 6 years from today. The car you wish to purchase costs
As part of your financial planning, you wish to purchase a new car exactly 6 years from today. The car you wish to purchase costs $12 comma 00012,000 today, and your research indicates that its price will increase by 4% to 8% per year over the next 6 years.
a.Estimate the price of the car at the end of 6 years if inflation is (1) 4% per year and (2) 8% per year.
b.How much more expensive will the car be if the rate of inflation is 8% rather than 4%?
c.Estimate the price of the car if inflation is 4% for the next 3 years and 8% for 3 years after that.
(Round to the nearest cent.)
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