A company has the option of building a warehouse now or building in three years from now. The cost now would be $400,000, but three years from now the cost will be $500,000. If the company minimum attractive rate of return (real) is 12% per year and the inflation rate is 10% per year, the present worth cost of the building in three years when inflation is considered is closed to: A. $268 700 (Answer) B. $355,900 C. $357,650 D. $402,700

A company has the option of building a warehouse now or building in three years from now. The cost now would be $400,000, but three years from now the cost will be $500,000. If the company minimum attractive rate of return (real) is 12% per year and the inflation rate is 10% per year, the present worth cost of the building in three years when inflation is considered is closed to: A. $268 700 (Answer) B. $355,900 C. $357,650 D. $402,700

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter2: The One Lesson Of Business

Section: Chapter Questions

Problem 2.6IP

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