CON E330 Fall 2023
Engineering Economy.
Homework #23.
10.43 For a market interest rate of 12% per year and an inflation rate of 7% per year, the real interest rate per year is closest to: a. 4.7%
c. 12%
b. 7%
d. 19.8%
0.12 = i + 0.07 + (i)(0.07)
1.07i = 0.05
i = 0.0464
(4.64%)
Answer is (a)
10.45 A modern 3D printer has a cost today of $20,000. The future worth of an equivalent printer 10 years from now at an inflation rate of 4% and an interest rate of 9% per year is closest to: a. $29,000
c. $67,900
b. $47,300
d. $70,080
i
f
= 0.09 + 0.04 + (0.09)(0.04) = 0.1336
(13.36%)
F = 20,000(F/P, 13.36%,10) = 20,000(1 + 0.1336)
10
= $70,086 Answer is (d)
10.50 Your favorite pickup is a well-equipped F-150 truck. The cost 4 years ago was $29,350. If the cost increased only by the inflation rate and the price today is $35,675, the inflation rate over the 4-year period was closest to: a. 3%
c. 5%
b. 4%
d. 6%
35,675 = 29,350(1 + f)
4
(1 + f)
4
= 1.2155
(1 + f) = 1.2155
0.25
f = 0.05
(5.0%)
Answer is (c)
