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Business, 24.01.2020 02:31 alyahmarie00

Let’s assume that the old clunker you have been driving needs $500 in repairs in order to pass an annual car inspection. you are considering buying a new car, and you contact car dealers and banks to determine the best deal you can get on a car loan. assume two different scenarios: (a) the lowest interest rate you find on a five-year car loan is 10 percent, and the annual rate of inflation for the next five years will be
9 percent. (b) the lowest interest rate you can find on a five-year car loan is 6 percent, and the annual rate of inflation for the next five years will be 1 percent.

question: underwhich scenario—(a) or (b)—will you pay less, in real income, for your car loan?

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Let’s assume that the old clunker you have been driving needs $500 in repairs in order to pass an an...
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