Jagmeet would like to buy a new car in 5 years. Based on his lifestyle, he believes a Tesla would be an excellent vehicle to own. A brand-new Tesla is estimated to cost $65,000 today. Assume the following:

1. Jagmeet has $15,000 saved in a tax-free savings account (TFSA) and does not have to pay taxes. He has contribution room for all of his savings.
2. Jagmeet can earn an investment rate of return equal to 5% p.a. (nominal rate) on his savings.
3. Inflation is 2% p.a.
4. Ignore taxes.

Required:

1. What is the cost of the car in 5 years after adjusting for inflation? (5 marks)

2. Using the answer you calculated in part a) of this question, how much money does Jagmeet have to save every month, at the beginning of the month, to purchase the car in 5 years? Assume Jagmeet will use the $15,000 he has saved in his TFSA and rates compound monthly. (5 marks)

3. At the end of year 3, Jagmeet realizes that inflation is increasing and as a result, the cost of the car has increased, more than he anticipated. What options or alternatives, can you offer Jagmeet? (No numbers, just words, give five alternatives). (5 marks)