Annual expenses for two alternatives have been estimated on different bases as follows. Alt. A Alt. B End of Year Annual Expenses Estimated in Future Annual Expenses Estimated in Real $ with $ base=0 1 2 3 4 120,000 132,000 148,000 168,000 100,000 110,000 120.000 130,000 If the average general price inflation rate is expected to be 6% per year and the real rate of interest is 9% per year, what is the PW of Alt. A.? (use positive sign for expenses) Hint: Purchasing power remains the same in year 1 with respect to b=0.

Annual expenses for two alternatives have been estimated on different bases as follows. Alt. A Alt. B End of Year Annual Expenses Estimated in Future Annual Expenses Estimated in Real $ with $ base=0 1 2 3 4 120,000 132,000 148,000 168,000 100,000 110,000 120.000 130,000 If the average general price inflation rate is expected to be 6% per year and the real rate of interest is 9% per year, what is the PW of Alt. A.? (use positive sign for expenses) Hint: Purchasing power remains the same in year 1 with respect to b=0.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

is
ver
ne
ordine
Annual expenses for two alternatives have been estimated on different bases as follows.
Alt. A
Alt. B
End of Year Annual Expenses Estimated in Future Annual Expenses Estimated in Real $ with
base=0
1
2
3
4
Between $300,000-387,000
If the average general price inflation rate is expected to be 6% per year and the real rate of
interest is 9% per year, what is the PW of Alt. A.? (use positive sign for expenses)
Hint: Purchasing power remains the same in year 1 with respect to b=0.
Between $387,000-388.000
120,000
132,000
148,000
168,000
Between $388,000-390,000
O Higher than $390,000
100,000
110,000
120,000
130,000

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