Time value Personal Finance Problem As part of your financial planning, you wish to purchase a new car 7 years from today. The car you wish to purchase costs $11,000 today, and your research indicates that its price will increase by 3% to 6% per year over the next 7 years. a. Estimate the price of the car at the end of 7 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 is 3% for the next 3 years and 6% for 4 years after that. a. The price of the car at the end of 7 years, if inflation is 3% per year, is $ . (Round to the nearest cent.) Time value An lowa state savings bond can be converted to $500 at maturity 20 years from purchase. If the state bonds are to be competitive with U.S. savings bonds, which pay 7% annual interest (compounded annually), at what price must the state sell its bonds? Assume no cash payments on savings bonds prior to redemption. Ignore taxes. The state must sell its bonds for $. (Round to the nearest cent.) Calculating deposit needed You put $7,000 in an account earning 6%. After 2 years, you make another deposit into the same account. Five years later (that is, 7 years after your original $7,000 deposit), the account balance is $25,000. What was the amount of the deposit at the end of year 2? The amount of the deposit at the end of year 2 is $ (Round to the nearest cent.) Present value of an annuity Consider the following case. (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Amount of annuity $33,000 Interest rate 6% Period (years) 7 a. Calculate the present value of the annuity assuming that it is (1) An ordinary annuity. (2) An annuity due. b. Compare your findings in parts a(1) and a(2). All else being identical, which type of annuityordinary or annuity due is preferable? Explain why. The present value of the ordinary annuity is $ (Round to the nearest cent.)