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please show steps 3 . You can buy a car that is advertised for $21,240 on the following terms: (a) pay $21,240 and receive a
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3 . You can buy a car that is advertised for $21,240 on the following terms: (a) pay $21,240 and receive a $4.240 rebate from the manufacturer, (b) pay $590 a month for 3 years for total payments of $21,240, implying zero percent financing. a. Calculate the present value of the payments for option (a) if the interest rate is 1.00% per month. Present value -ok -nces b. Calculate the present value of the payments for option (b) if the interest rate is 100% per month. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Present value c. Which is the better deal? 12 5 Good news: You will almost certainly be a millionaire by the time you retire in 50 years. Bad news: The inflation rate over your lifetime will average about 2.8%. a. What will be the real value of $1 million by the time you retire in terms of today's dollars? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Real value h es b. What real annuity (in today's dollars) will $1 million support if the real interest rate at retirement is 2.2% and the annuity must last for 20 years? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Real annuityStep by Step Solution
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