A multinational security software company is planning an overseas expansion that will cost $47.00 million of today's dollars 3 years from now. Due to a robust economy in Europe, the cost is expected to increase by 15.00% per year in each of the next 3 years. Assuming the inflation rate is 4% per year, determine the required annual deposit into a fund that earns the market rate of 8.00% per year to ensure that the amount needed in 3 years will be available. (Round the final answer to three decimal places.) The required annual deposit is $

A multinational security software company is planning an overseas expansion that will cost $47.00 million of today's dollars 3 years from now. Due to a robust economy in Europe, the cost is expected to increase by 15.00% per year in each of the next 3 years. Assuming the inflation rate is 4% per year, determine the required annual deposit into a fund that earns the market rate of 8.00% per year to ensure that the amount needed in 3 years will be available. (Round the final answer to three decimal places.) The required annual deposit is $

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: Aquatech Microsystems spent $183,000 for a communications protocol to achieve interoperability among…

A: The nominal interest rate or money interest rate can be any given or declared rate of interest. The…

Q: A small scale mining investment is expected to generate $60,000 per year in profits over the next 15…

A: The objective of this question is to calculate the future value of an annuity in actual dollars and…

Q: You expect to receive an inheritance of $50,000 six years from now. Its present worth at a real…

A: The value of inheritance (IH) is $50,000. Inflation rate (f) is 3%. Real rate of interest (i) is 4%.…

Q: The Bureau of Labor Statistics has a website (www.bls.gov) that contains a Consumer Price Index…

A: Te CPI is adjusted to the purchasing power of the consumers over different periods of time. The CPI…

Q: Johnson Thermal Products uses austenitic nickel-chromium alloys to manufacture resistance heating…

A: The rate at which prices rise in the economy is known as the inflation rate. Unemployment declines…

Q: You and your sister went shopping today for jeans. The pair she bought cost $49.95 and it is…

A: The annual inflation rate measures the percentage changes in the average price level of a bundle of…

Q: If the rate of inflation is 3.9% per year number of years from today. p(t)=800(1.039)^(t)

A: Inflation is the rise in the price of goods and services in the market. Inflation can be measured by…

Q: A top-of-the-line 3D printer costs $40,000 today. The manufacturer plans to raise the price so that…

A: The cost of the machine (CM) is $40,000. Rate of return (i) is 5%, inflation is 4%. Then the time…

Q: You just made an investment in an insurance policy that is guaranteed to pay you $1.8 million 20…

A: Future value (FV) is $1,800,000. Inflation rate (f) is 3.8%. Time period (n) is 20. Then, the…

Q: Canada's government savings bonds pay 2.5% annual real rate of return compounded daily. Professor…

A: Annual real rate of return on savings bond= 2.5 percent compounded daily.Amount of money invested by…

Q: If the effective annual interest rate is 9% per year and inflation is 3.8% per year what is the true…

Q: The federal-level Pell Grant program provides financial aid to needy college students. The grant…

A: The average inflation rate is a measurement of how quickly on average prices for goods and services…

Q: When the inflation rate is 4% per year, how many inflated dollars will be required 20 years from now…

A: Macroeconomics examines the working, composition, and dynamics of an economy. To comprehend and…

Q: For many years, college cost (including tuition, fees, room, and board) increases have been higher…

A: Estimated total cost refers to the anticipated or predicted total cost of a specific expense or…

Q: Due to inflation, a refrigerator that formerly sold for $450 now sells for 7% more. Which of the…

A: Inflation is the economic phenomenon in which the general level of prices of goods and services in…

Q: Johnson Thermal Products uses austenitic nickel-chromium alloys to manufacture resistance heating…

A: The rate at which prices rise in the economy is known as the inflation rate. Unemployment declines…

Q: Required information For many years, college costs (including tuition, fees, and room and board)…

A: Average total cost is the sum of all the cost of production by the total quantity of output of the…

Q: Required information Aquatech Microsystems spent $185,000 for a communications protocol to achieve…

A: Inflation is the rate change in the worth of the Wholesale Price Index (WPI) on a year-on year…

Q: ! Required information Aquatech Microsystems spent $210,000 for a communications protocol to achieve…

A: Present Value(PV) is the current worth of the amount that is due to received or paid in the future.…

Q: An engineer who is now 65 years old began planning for retirement 40 years ago. At that time, he…

A: A 65-year-old engineer planned for retirement 40 years ago. He thought when he retired he would have…

Question

A multinational security software company is planning an overseas expansion that will cost $47.00 million of today's dollars 3 years
from now. Due to a robust economy in Europe, the cost is expected to increase by 15.00% per year in each of the next 3 years.
Assuming the inflation rate is 4% per year, determine the required annual deposit into a fund that earns the market rate of 8.00% per
year to ensure that the amount needed in 3 years will be available. (Round the final answer to three decimal places.)
The required annual deposit is $

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Define annual deposit

VIEW

Step 2: Calculation of annual deposit

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

a-ß, Inc., a high-tech in San Diego, whose stock trades on the NYSE exchange uses a MARR of 27.800% per year. If the chief financial officer (CFO) said the company expects to make a real rate of return of 20% per year on its investments over the next 3-year period, what is the company expecting the annual inflation rate to be over that time period? (Round the final answer to three decimal places.) The company is expecting an annual inflation rate of %.
You are saving to buy a car which in 2022 costs $30,000. You intend to make 36 equal consecutive payments to an account starting one month from now. The interest rate is .5% per month, compounded monthly. If the inflation rate is 4% per year compounded annually, how much in actual dollars should the periodic payments be.
The cost of constructing a roundabout (R/A) in a low-traffic residential neighborhood 5 years ago was $625,000. A civil engineer designing another R/A that is almost the same design estimates the cost today will be $740,000. If the cost had increased only by the inflation rate over the 5 years, determine the inflation rate per year.
A machine currently under consideration by Marcus Industries has a cost of $31, 000. When the purchasing manager complained that a similar machine the company purchased 5 years ago was much cheaper, the salesman responded that the cost of the machine has increased solely in accordance with the inflation rate, which has averaged 5% per year. When the purchasing manager checked the invoice for the machine he purchased 5 years ago, he saw that the price was $25,000. Was the salesman telling the truth about the increase in the cost of the machine? What should the machine cost now, provided the price increased by only the inflation rate? Use the formula
If the market rate today on foreign stock investments is 12% per year and the inflation rate is 5% per year, the number of future dollars seven years in the future that will have the same purchasing power as $2000 now is closest to: O $905 O $1421 O $2810 O $4420
2. An independent contractor is trying to decide whether to lease new equipment now or save his money and purchase it in 5 years' time when he is able to fully pay for the equipment without interest. The cost of the equipment is $73,000 if leased or $85,000 if purchased 5 years from now. At a real MARR of 10% per year and an inflation rate of 4% per year, determine if the company should lease it now or wait and purchase later (a) without any adjustment for inflation and (b) with inflation considered.