A bookstore offers you the following deal: you pay $33 today (in January) and you get...

A bookstore offers you the following deal: you pay $33 today (in January) and you get 8%

off the price of everything you purchase in December (for simplicity assume exactly 12

months from now). If your savings account earns 3.08% APR (compounded monthly), how

much do you have to buy in December to just break even on the offer?

Expert Solution

The amount you have to buy in December = ($33 / 8%) * (1 + 3.08% / 12)^12 

= $412.50 * 1.0312385

= $425.39


The amount you have to buy in December = $425.39

jeff jeffy answered 2 years ago

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