Question
A certain magazine offers its subscribers the opportunity to Buy Now and Save. If at the time their subscription renewal is due they agree
A certain magazine offers its subscribers the opportunity to "Buy Now and Save." If at the time their subscription renewal is due they agree to pay for 2 years rather than 1, the renewal price will be $50 per year rather than the usual $60 per year. At what interest rate will the consumer, who is certain she will subscribe t the magazine for the next 2 years, decide to "Buy Now and Save"? A) Any interest rate over 150 percent B) Any interest rate over 1.5 percent C) Any interest rate under 5 percent D) Any interest rate under 50 percent E) She will always take this offer if she is absolutely certain to buy the magazine for another 2 years.
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Fundamentals of Investments
Authors: Gordon J. Alexander, William F. Sharpe, Jeffery V. Bailey
3rd edition
132926172, 978-0132926171
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