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Suppose that you are considering subscribing to Economist Analyst Today magazine. The magazine is advertising a one-year subscription for $60 or a two-year subscription for $115. You plan to keep getting the magazine for at least two years. The advertisement says that a two-year subscription saves you $5 compared to buying two successive one-year subscriptions. If the interest rate is 10%, should you subscribe for the one year or for the two year subscription? (Assume that one year from now a one year subscription will still be $60.) 

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M91406509

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