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Indifferent between the two prices

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Peter and Reesa can book their Horizon Holiday package at the early-booking price of $3800, or wait five months and pay the full price of $3900.

(a) Which option should they select if money can earn a 6.5% rate of return? You must show your work.

(b) At what interest rate would they be indifferent between the two prices?

Reference no: EM132666032

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