A barrel of oil has a current cost of $90/barrel. If general inflation is 2.4%/year and oil has a real escalation rate of 6%/year, what will a barrel of oil cost in actual dollars seven years from now? Oil will cost in actual dollars seven years from now $ /barrel. (Round to the nearest cent.)
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- If the price of a gallon of regular gasoline is $2.49 and the anticipated rate of inflation in energy prices is such that the cost of gasoline is expected to rise by 5 percent per year, what is the expected price per gallon in 10 years? The expected price per gallon of gas in 10 years is $ (Round to two decimal places.)The demand for a product during the next ten years will be such that revenues will be $100,000 the first year and will increase by $10,000 each year thereafter. If inflation is assumed to be 6% per yuear and the company uses 10% in its economic studies, what is the present worth of the revenues expressed in present dollars?If the price of a gallon of regular gasoline is $2.49 and the anticipated rate of inflation in energy prices is such that the cost of gasoline is expected to rise by 5 percent per year, what is the expected price per gallon in 10 years? The expected price per gallon of gas in 10 years is $
- The average cost of a certain model car was $22,000 ten years ago. This year the average cost is $35,000. (a) Calculate the average monthly inflation rate (fm) for this model. (b) Given the monthly rate fm, what is the effective annual rate, f, of inflation for this model? (c) Estimate what these will sell for 10 years from now, expressed in today’s dollars.Suppose natural gas experiences a 1.8% increase per year in real terms over the foreseeable future. The cost of a 1,000 cubic feet of natural gas is now $7.50. Solve, a. What will be the cost in real terms of 1,000 cubic feet of natural gas in 22 years? b. If the general price inflation rate (e.g., the CPI) for the next 22 years is expected to average 3.2% per year, what will a 1,000 cubic feet of natural gas cost in actual dollars 22 years from now?Suppose that your salary is $45,000 in year one, will increase at 4%per year through year four, and is expressed in actual dollars as follows: If the general price inflation rate (f ) is expected to average 6% per year, what is the real dollar equivalent of these actual-dollar salary amounts? Assume that the base time period is year one (b = 1).
- Suppose that the current price of oil is $ 90 per bbl. Suppose it costs $ 0.5 per bbl per month to store oil (payable monthly in advance). Suppose also that the term structure is flat with a continuously compounded rate of interest of 3 % for all maturities. Calculate the forward price of oil for delivery in 3 months.2. ABC Corporation plans to set aside $50,000 per year beginning 1 year from nowfor replacing equipment 6 years from now. What will be the purchasing power (interms of current-value dollars) of the amount accumulated, if the investment growsby 10% per year, but inflation averages 4% per year?A company is considering buying a CNCmachine. In today’s dollars, it is estimated that themaintenance costs for the machine (paid at the endof each year) will be $25,000, $26,000, $28,000,$30,000, and $32,000 for years 1 to 5, respectively.The general inflation rate ( f ) is estimated to be5% per year, and the company will receive 13%return (interest) per year on its invested funds during the inflationary period. The company wants topay for maintenance expenses in equivalent equalpayments (in actual dollars) at the end of each ofthe five years. Find the amount of the company’spayments
- Suppose that your salary is $35,000 in year one, will increase at 6% per year through year 4, and is expressed in actual dollars as follows: End of Year Salary (A$) 1 $35,000 2 37,100 3 39,326 4 41,685 If the general price inflation is expected to average 8% per year for the first two years and 7% per year for the last two years, A. What is the salary in real terms year 2? B. What is the % of increase in real terms from year 1 to year 2? (expressed in decimals)How much can the manufacturer of superconducting magnetic energy storage systems afford to spend now on new equipment in lieu of spending$75,000 four years from now? The company’s real MARR is 12% per year and the inflation rate is 3% per year.Calculate the purchasing power of $80,000 in 15 years using an annual inflation rate of 6%. Round to the nearest cent.