21. Inflation If inflation causes the cost of automobiles to increase by 2.5% each year, what should a car cost today if it cost $21,000 5 years ago? 22. Assume you are thinking of buying a house currently priced at $169,000. If housing prices rise at an annual inflation rate of 3%, estimate the purchase price of a similar house if you wait 4 years before committing yourself to buying one. 23. Suppose when you are 52 years old, the yearly statement you get from the Social Security Administration estimates that your monthly payment at age 66 will be $620. If inflation stays constant at 2%, what will be the purchasing power of that $620? 24. Calculate the effective annual rate for an investment that earns 7.1% interest compounded quarterly. Round to the nearest hundredth of a percent. 25. What is the effective annual interest rate of an investment that pays 7.6% annual interest, compounded quarterly? Round to the nearest hundredth of a percent.
21. Inflation If inflation causes the cost of automobiles to increase by 2.5% each year, what should a car cost today if it
cost $21,000 5 years ago?
22. Assume you are thinking of buying a house currently priced at $169,000. If housing prices rise at an annual inflation
rate of 3%, estimate the purchase price of a similar house if you wait 4 years before committing yourself to buying one.
23. Suppose when you are 52 years old, the yearly statement you get from the Social Security Administration estimates
that your monthly payment at age 66 will be $620. If inflation stays constant at 2%, what will be the
that $620?
24. Calculate the effective annual rate for an investment that earns 7.1% interest compounded quarterly. Round to the
nearest hundredth of a percent.
25. What is the effective annual interest rate of an investment that pays 7.6% annual interest, compounded quarterly?
Round to the nearest hundredth of a percent.
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