Contemporary Engineering Economics (6th Edition)
Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
Textbook Question
Chapter 11, Problem 6P

An annuity provides for 10 consecutive end-of-year payments of $72,000. The average general inflation rate is estimated to be 4% annually, and the market interest rate is 8% annually. What is the annuity worth in terms of a single equivalent amount of today’s dollars?

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"Consider the following cash flow in actual dollars. The inflation rate is 3.2%. The inflation-free interest rate is 9.1%. What is the net present worth of the cash flow based on the market interest rate?The cash flow in actual dollars for year 0 through 3 is -$78, $18, $18, and $41 respectively. Round your answer to the nearest cent."
The average inflation rate is calculated on the basis of the CPI for all the items in the market basket. True or false?
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