Time value

Personal Finance Problem

As part of your financial planning, you wish to purchase a new car 6 years from today. The car you wish to purchase costs $17,000 today, and your research indicates that its price will increase by 3% to 6% per year over the next 6 years.

a.Estimate the price of the car at the end 6 of years if inflation is (1) 3% per year and (2) 6% per year.

b.How much more expensive will the car be if the rate of inflation is 6% rather than 3%?

c.Estimate the price of the car if inflation is3 % for the next 2 years and 4% for 4 years after that.