QUESTION 2 2. You are saving to buy a car which in 2022 costs $30,000. You intend to make 36 equal consecutive payments to an account starting one month from now. The interest rate is .5% per month, compounded monthly. If the inflation rate is 4% per year compounded annually, how much in actual dollars should the periodic payments be.

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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QUESTION 2
2. You are saving to buy a car which in 2022 costs $30,000. You intend to make 36 equal consecutive payments to an account starting one month
from now. The interest rate is .5% per month, compounded monthly. If the inflation rate is 4% per year compounded annually, how much in actual
dollars should the periodic payments be.
QUESTION 3
3. What is the inflation free (real interest rate) if the market rate is 12.6% and the inflation rate is 5.6%? Express answer to 3 digits after decimal
point.
Transcribed Image Text:QUESTION 2 2. You are saving to buy a car which in 2022 costs $30,000. You intend to make 36 equal consecutive payments to an account starting one month from now. The interest rate is .5% per month, compounded monthly. If the inflation rate is 4% per year compounded annually, how much in actual dollars should the periodic payments be. QUESTION 3 3. What is the inflation free (real interest rate) if the market rate is 12.6% and the inflation rate is 5.6%? Express answer to 3 digits after decimal point.
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