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Question:
As part of your financial planning, you wish to purchase a new car exactly 6 years from today. The car you wish to purchase costs $11000 today, and your research indicates that its price will increase by 2% to 4% per year over the next 6 years.
A) Estimate the price of the car at the end of 6 years if inflation is 2% per year and 4% per year ?
B) How much more expensive will the car be if the rate of inflation is 4% rather than 2%?
C) Estimate the price of the car if inflation is 2% for the next 2 years and 4% for 4 years after that ?
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