Time valueÂ Isabella wishes to purchase a Nissan GTR. The car costs Â£85,000 today and, after completing her graduation, she has secured a well-paying job and is able to save for the car. The price trend indicates that its price will increase by 3% to 6% every year. Isabella wants to save enough to buy the car in 5 years from today.
a. Estimate the price of the car in 5 years if the price increases by (1) 3% per year and (2) 6% per year.
b. How much more expensive will the car be if the price increases by 6% rather than 3%?