Peter and Reesa Can Book Their Horizon Holiday Package at the Early-Booking

Essay

Peter and Reesa can book their Horizon Holiday package at the early-booking price of $3,850, or wait four months and pay the full price of $3,995.
a) Which option should they select if money can earn a 5.25% rate of return? In current dollars, how much do they save by selecting the preferred option?
b) Which option should they select if money can earn a 9.75% rate of return? In current dollars, how much do they save by selecting the preferred option?
c) At what interest rate would they be indifferent between the two prices?