Engineering Economy
16th Edition
ISBN: 9780133582819
Author: Sullivan
Publisher: DGTL BNCOM
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Chapter 8, Problem 55FE
To determine
Calculate the increase percentage of cost.
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If the CPI was 106 in 2013 and 116 in 2014, the inflation rate in 2014 was:
(a) 106%; 20 2020(b) 116%; (c) 9.4%; (d) 16%
A machine cost $2,550 on January 1, 2014, and $3,930 on January 1, 2018. The average inflation rate over these four years was 7% per year. What is the true percentage increase in the cost of the machine from 2014 to 2018? (a) 14.95% (b) 54.12% (c) 7.00% (d) 17.58% (e) 35.11%.
You and your sister went shopping today for jeans. The pair she bought cost $49.95 and it is identical to a pair you purchased 2 years ago for $37.87. (a) determine the numerical and percentage increase in cost. (b) Determine the annual inflation rate of the cost increase.
Chapter 8 Solutions
Engineering Economy
Ch. 8 - Prob. 1PCh. 8 - Prob. 2PCh. 8 - Prob. 3PCh. 8 - Prob. 4PCh. 8 - Prob. 5PCh. 8 - Prob. 6PCh. 8 - Prob. 7PCh. 8 - Prob. 8PCh. 8 - Prob. 9PCh. 8 - Prob. 10P
Ch. 8 - Prob. 11PCh. 8 - Prob. 12PCh. 8 - Prob. 13PCh. 8 - A commercial building design cost 89/square-foot...Ch. 8 - Prob. 15PCh. 8 - Prob. 16PCh. 8 - Prob. 17PCh. 8 - Prob. 18PCh. 8 - Prob. 19PCh. 8 - Prob. 20PCh. 8 - Prob. 21PCh. 8 - Prob. 22PCh. 8 - Prob. 23PCh. 8 - Prob. 24PCh. 8 - Prob. 25PCh. 8 - Prob. 26PCh. 8 - Prob. 27PCh. 8 - Prob. 28PCh. 8 - Prob. 29PCh. 8 - Prob. 30PCh. 8 - Prob. 31PCh. 8 - Prob. 32PCh. 8 - Prob. 33PCh. 8 - Prob. 34PCh. 8 - Prob. 35PCh. 8 - Prob. 36PCh. 8 - Prob. 37PCh. 8 - Prob. 38PCh. 8 - Prob. 39PCh. 8 - Prob. 40PCh. 8 - Prob. 41PCh. 8 - Prob. 42PCh. 8 - Prob. 43PCh. 8 - Prob. 44PCh. 8 - Prob. 45PCh. 8 - Prob. 46PCh. 8 - Prob. 47PCh. 8 - Prob. 48PCh. 8 - Prob. 49SECh. 8 - Prob. 50SECh. 8 - Prob. 51SECh. 8 - Prob. 52CSCh. 8 - Suppose the cost of electricity is expected to...Ch. 8 - Prob. 54CSCh. 8 - Prob. 55FECh. 8 - Prob. 56FECh. 8 - Prob. 57FECh. 8 - Prob. 58FECh. 8 - Prob. 59FECh. 8 - Prob. 60FECh. 8 - Prob. 61FE
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- Suppose you start saving for retirement when you are 45 years old. You invest $6,000 the first year and increase this amount by 3% each year to match inflation. How much money will you have saved after 25 years if the interest rate earned on the retirement account is 8% per year? (a) You will have saved $. (Round to the nearest dollar.) (b) On the other hand, you will have saved $ if the interest rate was 3% instead of the original 8%.arrow_forward(c) Seasonally; (d) Frictionally. Q.1.9 If the CPI was 106 in 2013 and 116 in 2014, the inflation rate in 2014 was: (a) 106%;arrow_forwardFor the next four years, a family anticipates buying $1.000 worth of groceries each year. If inflation is expected to be 3%/year, what are the constant-worth cash flow and the then- current cash flow required to purchase the groceries? Constant-worth (C.) $1,000 $1.000 $1,000 $1,000 Then-current (T.) $1.000 x 1.03= $1,030 $1.030 x 1.03 $1,060.90 $1,060.90 x 1.03 = $1,092.73 $1,092.73 x 1.03 = $1,125.51 Year (k) %3D %3D %3D The then-current equivalent cash flow will be T = T,(1+)* for k 1,..,n Since C = Ta. so T = C(1+)* for k = 1,.,n Using the cash flows of Example 1, determine the present worth of the grocery purchase using a. constant-worth analysis (in other words, using the constant-worth cash flow) b. then-current analysis (in other words, using the then-curent cash flow) The inflation rate is 3% per year and the real time value of money is 15%.arrow_forward
- The cost of constructing a roundabout in a lowtraffic residential neighborhood five years ago was $625,000. A civil engineer designing another one that is almost exactly the same estimates the cost today will be $740,000. (a) If the cost had increased only by the inflation rate over the fiveyears, what was the actual inflation rate per year? (b) What is the interest rate involved in this computation?arrow_forwardA company is planning to invest $500,000 in a new business opportunity. The current inflation rate in the country is 1.3 % per quarter. If the company has the policy of maintaining the purchasing power of their invested dollars and also earn 10% real interest rate per year, (a) to what Future Dollars value the invested $500,000 should grow in 5 years? (b) Calculate the purchasing power of the amount you found in part a) in terms of Today's Dollars.arrow_forwardSome 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 6% per year. (a) Find the present worth. (b) Use a spreadsheet to find the PW value using one NPV function with all cash flows expressed as future dollars. Year Cash Flow, $ Expressed as 0 16,000 CV 3 40,000 Then-current 4 12,000 Then-current 7 26,000 CVarrow_forward
- An economist has predicted that during the next 12 years, prices in the U.S. will increase 55%. He expects a further increase of 25% in the subsequent 8 years. Compute the annual inflation rate, f, for the entire 20-year period.arrow_forwardA company is planning to invest $500,000 in a new business opportunity. The current inflation rate in the country is 1.3 % per quarter. If the company has the policy of maintaining the purchasing power of their invested dollars and also earn 10% real interest rate per year, (a) to what Future Dollars value the invested $500,000 should grow in 5 years?arrow_forwardAn asset costs $10,000 today. If inflation is 4% per year and interest is 12% per year, what will be the appropriate future value of the machine adjusted for inflation in 8 years?arrow_forward
- If the CPI was 106 in 2013 and 116 in 2014, the inflation rate in 2014 was: choose the correct answer(a) 106% (b) 116%; (c) 9.4%; (d) 16%arrow_forwardFind the present worth of earthmoving equipment that has a first cost today of $141,000, an annual operating cost of $55,000, and a salvage value of 20% of the first cost after 5 years, these estimates being in future dollars. Assume that the real interest rate is 8% per year and that inflation has averaged 5.5% per year. Solve with inflation (a) not accounted for and (b) accounted for. a) The present worth with inflation not accounted for is $ b) The present worth with inflation accounted for is $arrow_forwardAn engineer deposits $10,000 into an account when the market interest rate is 10% per year and the inflation rate is 5% per year. If the account is left undisturbed for 5 years, (a) How much money will be in the account? (b) What will be the purchasing power in terms of today’s dollars? (c) What is the real rate of return on the account?arrow_forward
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