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Time value Personal Finance Problem As part of your financial planning, you wish to purchase a new car 8 years from today. The car you wish to purchase costs $20,000 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 $ The price of the car at the end of 8 years, if inflation is 6% per year, is 5 b. At the higher rate of inflation, the car is more expensive by $ (Round to the nearest cent.) (Round to the nearest cent.) (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 (Round to the nearest cent.)

Time value Personal Finance Problem As part of your financial planning, you wish to purchase a new car 8 years from today. The car you wish to purchase costs $20,000 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 $ The price of the car at the end of 8 years, if inflation is 6% per year, is 5 b. At the higher rate of inflation, the car is more expensive by $ (Round to the nearest cent.) (Round to the nearest cent.) (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 (Round to the nearest cent.)

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Time value Personal Finance Problem As part of your financial planning, you wish to purchase a new car 8 years from today. The car you wish to purchase costs $20,000 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 $[ The price of the car at the end of 8 years, if inflation is 6% per year, is $ b. At the higher rate of inflation, the car is more expensive by $ (Round to the nearest cent.) (Round to the nearest cent.) (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 (Round to the nearest cent.)
Transcribed Image Text:Time value Personal Finance Problem As part of your financial planning, you wish to purchase a new car 8 years from today. The car you wish to purchase costs $20,000 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 $[ The price of the car at the end of 8 years, if inflation is 6% per year, is $ b. At the higher rate of inflation, the car is more expensive by $ (Round to the nearest cent.) (Round to the nearest cent.) (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 (Round to the nearest cent.)
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