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Homework answers / question archive / Peter and Mary want to buy identical GT2 911s in 7 years, to establish bragging rights at the Nordschleife

Peter and Mary want to buy identical GT2 911s in 7 years, to establish bragging rights at the Nordschleife

Finance

Peter and Mary want to buy identical GT2 911s in 7 years, to establish bragging rights at the Nordschleife. Paul will buy a Huracan, but wisely isn't going to bother showing up. The GT2 costs $378,000 today which is expected to increase at an annualrate of 2.2% per year. Both will invest a single amount today in accounts that pay 5.5% APR, but Peter's account compounds monthly,and Mary's semiannually. How much more must Mary invest compared to Peter?

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