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A one-year subscription costs $75; a three-year subscription costs $200; and a five-year subscription costs $330. Subscriptions payments are due at the beginning of the subscription. The nominal rate of interest is 7.12% and inflation is expected to be 3.0%. Assume that you are a ”long-term subscriber” (i.e., you will be subscribing to the Wall Street Journal forever). Which subscription period is the best?

Reference no: EM13914873

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Subscriptions payments are due at beginning of subscription : A one-year subscription costs $75; a three-year subscription costs $200; and a five-year subscription costs $330. Subscriptions payments are due at the beginning of the subscription. The nominal rate of interest is 7.12% and inflation is expected to ..
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