Andy Would Like to Buy a New Car but Must

Multiple Choice

Andy would like to buy a new car but must complete a two-year commitment to the Peace Corp before he will drive the new car.The current price of the car Andy wants to buy is $32,000,and the dealer expects the price of a similar new car to be $35,000 in two years.If Andy can earn an annual interest rate of 4% on his money,should he buy the car now or wait for two years? Why? Note: Storage costs if Andy purchases the car are $0.Please limit your considerations to the factors offered in the answer choices.

A) Buy now because if Andy invests the $32,000 today it will only increase in value to $34,611,and this is less than the cost of his desired new car in two years.
B) Andy is indifferent because his $32,000 investment will be worth exactly $35,000 after two years.
C) Buy in two years because at $35,000 the car will cost less than the $36,385 Andy will have after investing the money for two years.
D) Buy in two years because $35,000 is a "real deal" for the car Andy wants.