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    Managerial Finance: Determine the Formula

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    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.

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    Solution Summary

    The solution determines the formula for the given problem regarding annual inflation rate.