Question
Time value Personal Finance ProblemAs part of your financial planning, you wish to purchase a new car 8 years from today. The car you wish
Time value Personal Finance ProblemAs part of your financial planning, you wish to purchase a new car
8
years from today. The car you wish to purchase costs
$13,000
today, and your research indicates that its price will increase by
3%
to
6%
per year over the next
8
years.a.Estimate the price of the car at the end of
8
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
5
years after that.
a. The price of the car at the end of
8
years, if inflation is
3%
per year, is
$nothing.
(Round to the nearest cent.)The price of the car at the end of
8
years, if inflation is
6%
per year, is
$nothing.
(Round to the nearest cent.)b. At the higher rate of inflation, the car is more expensive by
$nothing.
(Round to the nearest cent.)c.The price of the car at the end of
8
years, if inflation is
3%
for the next
3
years and
6%
for
5
years after that, is
$nothing.
(Round to the nearest cent.)
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