EBK ENGINEERING ECONOMY
EBK ENGINEERING ECONOMY
17th Edition
ISBN: 9780134838229
Author: Sullivan
Publisher: PEARSON
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Chapter 8, Problem 6P
To determine

Calculate the present value.

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Better Corporation can purchase a piece of equipment now for $120,000 or buy it 4 years from now for $188,000. The MARR requirement for the plant is a real return of 14% per year. If an inflation rate of 6% per year must be accounted for, what is the Future Value with inflation? a) $188,000 b) $255,873 c) $ 88,169 d) $120,000 Should the company buy the machine now or later? a) Now b) Later
What should be done if the future price of a specific cost element (j) is not expected to follow the general inflation rate?
Assume the market interest rate is 8% per year and inflation averages 5% per year. calculate the perpetual equivalent annual worth in future dollars for years 1 through ∞ for an income of $65,000 now and $5000 per year thereafter.
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