4. EncryptCo is a Canadian company considering an international contract with a firm in the nation of Iceberg. The contract will last 5 years. It will involve the construction of an electrical generator for a residential area in Iceberg's largest city, Snowville. Iceberg's national currency is the blizzar. The table below contains data for the project. Complete this question using Excel. Include the output onto your solution and please ensure that it fits onto a page. First Cost (Blizzars) Net Revenue 2022 to 2027 (Blizzars) Expected Iceberg Inflation Rate Value of the Blizzar VS Canadian dollar in 2022 ($) Expected annual rate of decline of the value of the Blizzar VS the Canadian dollar 1,800,000 550,000 10% $1.25 5%

Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter22: Inflation
Section: Chapter Questions
Problem 31CTQ: If a government gains from unexpected inflation when it borrows, why would it choose to offer...
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4. EncryptCo is a Canadian company considering an international contract with a firm in
the nation of Iceberg. The contract will last 5 years. It will involve the construction of
an electrical generator for a residential area in Iceberg's largest city, Snowville.
Iceberg's national currency is the blizzar. The table below contains data for the project.
Complete this question using Excel. Include the output onto your solution and please
ensure that it fits onto a page.
First Cost (Blizzars)
Net Revenue 2022 to 2027 (Blizzars)
Expected Iceberg Inflation Rate
Value of the Blizzar VS Canadian dollar in
2022 ($)
Expected annual rate of decline of the value
of the Blizzar VS the Canadian dollar
Expected Inflation in Canada
EncryptCo's Real MARR
1,800,000
550,000
10%
$1.25
5%
6.5%
15%
(a) Find the present worth of the project assuming no inflation.
(b) Find the present worth of the contract using the above inflation rates.
(c) Should EncryptCo pursue the project given the above inflation rates?
Transcribed Image Text:4. EncryptCo is a Canadian company considering an international contract with a firm in the nation of Iceberg. The contract will last 5 years. It will involve the construction of an electrical generator for a residential area in Iceberg's largest city, Snowville. Iceberg's national currency is the blizzar. The table below contains data for the project. Complete this question using Excel. Include the output onto your solution and please ensure that it fits onto a page. First Cost (Blizzars) Net Revenue 2022 to 2027 (Blizzars) Expected Iceberg Inflation Rate Value of the Blizzar VS Canadian dollar in 2022 ($) Expected annual rate of decline of the value of the Blizzar VS the Canadian dollar Expected Inflation in Canada EncryptCo's Real MARR 1,800,000 550,000 10% $1.25 5% 6.5% 15% (a) Find the present worth of the project assuming no inflation. (b) Find the present worth of the contract using the above inflation rates. (c) Should EncryptCo pursue the project given the above inflation rates?
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