personal_scenario

Jun 17th, 2015
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Simpson University
Course: general
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Suppose I wish to purchase a vehicle whose price is $30,000. If I have borrowed the money at 6% interest compounded annually, will return it over 5 years, the amount I will have spent on the vehicle will be $40,147 total.

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Suppose I wish to purchase a vehicle whose price is $30,000. If I have borrowed the money at 6% interest compounded annually, will return it over 5 years, the amount I will have spent on the vehicle will be $40,147 total.I can achieve another alternative by saving the money for 5 years until I have gathered enough money to acquire the vehicle outright. Let's say that inflation is about 3%. The $30,000 vehicle I could have bought now will cost $34,778 in 5 years. Thus the opportunity cost of purchasing the vehicle right away is about $40,147 $34,778 = $5369. Conversely, the opportunit

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