please show works Personal Finance Problem P5-6 Time value As part of your financial...
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Personal Finance Problem P5-6 Time value As part of your financial planning, you wish to purchase a new car 5 years from today. The car you wish to purchase costs $14,000 today, and your research indi- cates that its price will increase by 2% to 4% per year over the next 5 years. a. Estimate the price of the car in 5 years if inflation is (1) 2% per year and (2) 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 3 years after that. PART TWO Financial P5-32 Value of mixed streams Find the present value of the streams of cash flows shown in the following table. Assume that the opportunity cost is 12%. B Year Cash flow Year Cash flow Year Cash flow 1 1 2-5 6 1-5 6-10 2 3 4 -$2,000 3,000 4,000 6,000 8,000 $10,000 5,000/yr 7,000 $10,000/yr 8,000/yr
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