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You would like to buy a car but must complete a 2 year commitment to the Peace Corp before you can drive the new car.
You would like to buy a car but must complete a 2 year commitment to the Peace Corp before you can drive the new car. The current price of the car you want to buy is $22,000 and the dealer expects the price of a similar new car to be $27,500 in 2 years. If you can earn an annual interest rate of 12.00% on your money, should you buy the car now or wait until you return? Why? (Note that storage costs of the car are SO) O Buy now, because you could earn more money investing the price of the car today O Buy when you return, because the annual price increase of the car is higher than your interest rate. O Buy when you return, because you could earn more money investing the price of the car today O Buy now, because the annual price increase of the car is higher than your interest rate. You are indifferent between buying today or when you return, because the annual price increase of the car is higher than your interest rate
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