Some of the following future cash flows have been expressed in then-current (future) dollars and others in CV dollars. Use an interest rate of 10% per year and an inflation rate of 5% per year. Find the present worth with all cash flows expressed in future dollars. Cash flow, $ 14,900 32,500 10,900 24,900 Expressed as CV Year 3. 4 Then-current Then-current CV The present worth with all cash flows expressed in future dollars is $[

Some of the following future cash flows have been expressed in then-current (future) dollars and others in CV dollars. Use an interest rate of 10% per year and an inflation rate of 5% per year. Find the present worth with all cash flows expressed in future dollars. Cash flow, $ 14,900 32,500 10,900 24,900 Expressed as CV Year 3. 4 Then-current Then-current CV The present worth with all cash flows expressed in future dollars is $[

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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A# man# is# planning# to# retire# in# 20# years.# He# can# deposit# money# for# his# retirement# at# 8%# compounded# monthly.# It# is# estimated# that# the# future# general# inflation# (!)# rate# will# be# 3%# compounded#monthly.#What#deposit,#in# terms#of#constant#dollars, must#be#made#each#month#until# the#man#retires#so#that#he#can#make#annual#withdrawals#of#$20,000,#in#terms#of#actual dollars,#over# the#15#years#following#his#retirement?#(Assume#that#his#first#withdrawal#occurs#at#the#end#of#the#first# year after#his#retirement.)
A father wants to save in advance for his 8-year old daughter’s college expenses.The daughter will enter the college 10 years from now. An annual amount of$20,000 in today’s dollars (constant dollars) will be required to support the college for 4 years. Assume that these college payments will be made at the beginning of each school year. (The first payment occurs at the end of 10 years). Thefuture general inflation rate is estimated to be 5% per year, and the interest rateon the savings account will be 8% compounded quarterly (market interest rate)during this period. If the father has decided to save only $1,000 (actual dollars) atthe end of each quarter until she goes to college (the last deposit occurs at the endof 10 years) how much will the daughter have to borrow to cover her sophomoreexpenses?(a) $4,120 (b) $4,314(c) $4,000 (d) $4,090
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