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Question 4.T-Y-S.W: Ahealth club offers you a special low membership rate of $29...

A health club offers you a special low membership rate of \$ 29 per month for a “guaranteed no price increase” period of 100 months. The manager of the club tells you proudly that “this \$ 29 a month for a lifetime membership is less expensive than a major medical treatment for heart disease costing \$ 4,000 one hundred months from now.” If your personal interest rate is 9 \% (APR) compounded monthly, is the manager correct in his statement? (4.15)

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The future lump-sum equivalent cost of the membership is:

F=\$ 29(F / A, 0.75 \%, 100)=\$ 29(148.1445)=\$ 4,296.19

The manager is incorrect in his claim.

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