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Managerial Finance 476(II)

2. Many economists view a 3% annual inflation rate as "acceptable". Assuming a 3% annual increase in the price of automobiles, how much will a new Saab 93 convertible cost you in 5 years if today's price is $38,000? What is the formula for this answer?
a. $32,779
b. $36,110
c. $40,575
d. $42,813
e. $44,052