For a present sum of $820,000, determine the annual worth in then-current dollars) in years 1 through 9 if the market interest rate is 13% per year and the infiation rate is 5% per year. The annual worth is $D
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- Due to the integrated nature of their capital markets, investors in both the U.S. and U.K. require the same real interest rate, 3.2%, on their lending. There is a consensus in capital markets that the annual inflation rate is likely to be 2.1% in the U.S. and 3.6% in the U.K. for the next three years. The GBP/USD rate is currently 1.3081. What is your expected future spot for GBP/USD three years from now? (X.XXXX)You are paying a series of five constant-dollar (or real-dollar) uniform payments of $2,025.95 beginning at the end of first year. Assume that the general inflation rate is 15.24% and the market interest rate is 15.24% during this inflationary period.The equivalent present worth of the project is:Merry Industries is considering a new piece of equipment for a project lasting 10 years with details as shown below. The costs and benefits are expected to keep increasing with the inflation rate even when a new machine is put into operation. Taking these into account, what is the annual worth that the company can expect from the machine? Initial cost $65,000 MARR 12% p y c y Inflation rate 3% p y c y Life 7 years Project life 10 years Machine value today with life of 3 years $24,500 Machine value today with life of 7 years $13,500 First year costs $7,200 First year benefits $25,800
- SA Forest Resources purchased forest acreage for $500,000 from which an estimated 200 million board feet of lumber are recoverable. The company will sell the lumber for $0.10 per board foot. No lumber will be sold next year because an environmental impact statement must be completed before harvesting can begin. In years 2 through 10, however, the company expects to remove 20 million board feet per year. The inflation rate is 8%, and the company’s MARR is 10%. Determine the depletion amount in years 1 and 2 by the cost depletion method.Calculate the market interest rate for a project with a life time of 3 years, where general inflation over the three years of project is estimated as 5%, 7% and 3% Assume the zero-inflation interest rate is 4%Find the cost of each item in five years, assuming a constant inflation rate of 9% E.) HD TV set, $1600 F.) Small car, $19,000 G.) Large car, $28,000
- Please solve => For a present sum of $880,000, determine the annual worth (in then-current dollars) in years 1 through 4 if the market interest rate is 13% per year and the inflation rate is 5% per year. The annual worth is $ ______?A father wants to save for his eight-year-old son's college expenses. The son will enter college 10 years from now. An annual amount of $40,000 in constant dollars will be required to support the son's college expenses for four years. Assume that these college payments will be made at the beginning of each school year. The future general inflation rate is estimated to be 6% per year, and the market interest rate on the savings account will average 8% compounded annually.(a) What is the amount of the son's freshman-year expense in terms of actual dollars?(b) What is the equivalent single-sum amount at the present time for these college expenses?(c) What is the equal amount, in actual dollars, the father must save each year until his son goes to college?Your department is budgeting miscellaneous expenses for the next 5 years. Your best guess at the annual inflation rate is 3.9% and the combined MARR is 15%. Expenses currently run $14,500 per year. Assume that expenses are end-of-year payments. Solve, a. Determine the then-current dollar amounts for years 1, 2, 3, 4, and 5. b. Determine the constant-dollar amount for years 1, 2, 3, 4, and 5. c. Determine the PW of the then-current-dollar amounts. d. Determine the PW of the constant dollar amounts.
- A series of five constant-dollar (or real-dollar)payments (beginning with $5,000 at the end of thefirst year) are increasing at the rate of 7% per year.Assume that the average general inflation rate is 5%and the market interest rate is 12% during this inflationary period. What is the equivalent present worthof the series?Aquatech Microsystems spent $183,000 for a communications protocol to achieve interoperability among its utility systems. The company uses a real interest rate of 15% per year on such investments and a recovery period of 5 years. (a) What is the annual worth of the expenditure in future dollars at an inflation rate of 6% per year? (b) Write a single-cell spreadsheet function to display the correct AW value.To reduce cooling electricity consumption in an industrial plant, it is proposed to install an absorption refrigeration system running on solar energy. The absorption system costs $300,000 and the operating and maintenance expenses are $8000 per year. It is estimated that this absorption system will save $27,500 per year from the electricity they save. The lifetime of the system is expected to be 20 years with an average annual inflation-adjusted interest rate of 4 percent. The system will have no salvage value after 20 years of its lifetime. Would you support this project from an economic point of view? How would you evaluate this project if the inflation-adjusted interest rate is 2 percent?