Question

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 $14,000 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 of 6 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 3 years after that.

a. The price of the car at the end of 6 years, if inflation is 3% per year is $    (Round to the nearest cent) 

The price of the car at the end of 6 years, if inflation is 6% per year, is $    (Round to the nearest cent) 

b. At the higher rate of inflation, the car is more expensive by $    (Round to the nearest cent.) 

c. The price of the car at the end of 6 years, if inflation is 3% for the next 3 years and 6% for 3 years after that is $    . (Round to the nearest cent)

Answer 1

answer a) at 3% inflation rate $ 16717

at 6% inflation rate $ 19859

b) $ 3142

c) the price of the car $ 18220
a Co st pice the c at the end e ,3 16116113-CoD ) ?メ16 111- onded-011) Cat end o luce 19859 hounded ol) t endo 185 - 6111 ミ芦3142

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