EBK CONTEMPORARY ENGINEERING ECONOMICS
6th Edition
ISBN: 9780134123950
Author: Park
Publisher: PEARSON CUSTOM PUB.(CONSIGNMENT)
expand_more
expand_more
format_list_bulleted
Question
Chapter 11, Problem 9P
To determine
Calculate the actual and constant dollar.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Q6. The purchase of a car requires a $25 000 loan to be repaid in monthly instalments for four years at 9% interest compounded monthly. If the general inflation rate is 4% compounded monthly, find the actual- and constant-dollar value of the 20th payment.
For a nominal inflation-adjusted interest rate of 24% per year compounded monthly, calculate the real interest rate per month when the inflation rateis 0.5% per month.
Suppose you have $100,000 cash today and you can invest it to become a millionaire in 15 years. What is the present purchasing power equivalent of this $1,000,000 when the average inflation rate over the first seven years is 5% per year, and over the last eight years it will be 8% per year?
Chapter 11 Solutions
EBK CONTEMPORARY ENGINEERING ECONOMICS
Ch. 11 - Prob. 1PCh. 11 - Prob. 2PCh. 11 - Prob. 3PCh. 11 - Prob. 4PCh. 11 - Prob. 5PCh. 11 - An annuity provides for 10 consecutive end-of-year...Ch. 11 - Prob. 7PCh. 11 - Prob. 8PCh. 11 - Prob. 9PCh. 11 - Prob. 10P
Ch. 11 - Prob. 11PCh. 11 - Prob. 12PCh. 11 - Prob. 13PCh. 11 - Prob. 14PCh. 11 - Prob. 15PCh. 11 - Prob. 16PCh. 11 - Prob. 17PCh. 11 - Prob. 18PCh. 11 - Prob. 19PCh. 11 - Prob. 20PCh. 11 - Prob. 21PCh. 11 - Prob. 22PCh. 11 - Prob. 23PCh. 11 - Prob. 24PCh. 11 - Prob. 25PCh. 11 - Prob. 26PCh. 11 - Prob. 27PCh. 11 - Prob. 28PCh. 11 - Prob. 29PCh. 11 - Prob. 30PCh. 11 - Prob. 31PCh. 11 - Prob. 1STCh. 11 - Prob. 2STCh. 11 - Prob. 3ST
Knowledge Booster
Similar questions
- Provided the inflation rate is f percent per year, to determine the purchasing power of $10,000 ten years from now, the $10,000 must be:a. divided by (1 + f )10b. multiplied by (1 + f )10c. divided by (1+ 0.10) fd. divided by (1 + f )arrow_forwardIn wisely planning for your retirement, you invest $22,000 per year for 20 years into a 401K tax-deferred account. Assume you make a real return of 10% per year when the inflation rate averages 3.2% per year. How many future dollars will you have in the account immediately after your last deposit? You will have $ future dollars in your account immediately after your last deposit.arrow_forwardAs an innovative way to pay for various software packages, a new high-tech service company has offered to pay your company, Custom Computer Services (CCS), in one of three ways: (1) pay $400, 000 now, (2) pay $1, 000, 000 5 years from now, or (3) pay 5 equal annual installments of $140, 000. If you, as president of CCS, expect to earn a real interest rate of 1/9 ~ 11.11% per year when the inflation rate is 12.5% per year, which offer should you accept? Justify your answer by showing that equivalent value of each option at some common point in time. Please explain wellarrow_forward
- The following represents the inflation rates of foreign country X for the past 5 years: Year 1: 35% Year 2: 20% Year 3: 25% Year 4: 30% Year 5: 15% Which statement is correct about the selection of a functional currency for country X at the end of year 5. a. Country X is highly inflationary; the US dollar must be used b. Country X is highly inflationary; the foreign currency must be used c. Country X is not highly inflationary; the US dollar must be used d. Country X is not highly inflationary; either the US dollar or the foreign currency may be used depending on the factors to determine the functional currency e. Country X is not highly inflationary; the foreign currency must be usedarrow_forwardThe future amount of P100,000 for a period of 8 years is equal to P341,655.49. Considering money is worth 10% per year with an inflation rate of "x " per cent per year, find the value of inflation rate.arrow_forwardAssume your salary is $55,000 in 2015 and $160,000 in 2045. If inflation has averaged 2% per year, what is the real or differential inflation rate of salary increases?arrow_forward
- How much money can the Eastman Land and Cattle Company afford to spend now for a tractor trailer in lieu of spending $69,000 three years from now, if the interest rate is 13% per year and the inflation rate is 6.1% per year? NOTE: This is a multi-part question. Once an answer is submitted, you will be unable to return to this part. Solve by factors. The Eastman Land and Cattle Company can afford to spend $ .arrow_forwardPrices are increasing at an annual rate of 6% the first year and 10% the second year. Determine the average inflation rate (f) over these two years.arrow_forward"An annuity provides for 15 consecutive end-of-year payments of $73,000 in actual dollars. The general inflation rate is 5% annually, and the inflation-free interest rate is 5% annually. What is the present value of the annuity after considering the effects of inflation?"arrow_forward
- If the annual inflation rate in an economy is i, then $1 borrowed at the beginning of a year will have the same purchasing power as ________ dollars at the end of the year. i (1/i) (1 − i) (1 + i)arrow_forwardDue 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)arrow_forwardA series of four annual constant-dollar payments beginning with $10,000 at the end of the first year is growing at the rate of 8% per year. Assume that the base year is the current year (n= 0). The market interest rate is 15% per year and the general inflation rate (f) is 7% per year. (a) Find the present worth of this series of payments, based on constant-dollar analysis The present worth is $ (Round to the nearest dollar.) don't use excel.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning