EBK CONTEMPORARY ENGINEERING ECONOMICS
EBK CONTEMPORARY ENGINEERING ECONOMICS
6th Edition
ISBN: 9780134123950
Author: Park
Publisher: PEARSON CUSTOM PUB.(CONSIGNMENT)
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Chapter 11, Problem 9P
To determine

Calculate the actual and constant dollar.

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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?
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