Should you subscribe for one year or for two years

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Reference no: EM131305509

Suppose that you are considering subscribing to Economist Analyst Today magazine. The magazine is advertising a one-year subscription for $60 or a two-year subscription for $115.

You plan to keep getting the magazine for at least two years. The advertisement says that a two-year subscription saves you $5 compared to buying two successive one-year subscriptions.

If the interest rate is 10%, should you subscribe for one year or for two years?

(Assume that one year from now a oneyear subscription will still be $60.)

Reference no: EM131305509

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