Continental Airlines operates in and out of many countries. Country A has a low inflation rate of 3% per year while country B has a high rate of 30% per year. A $1 million fund is maintained in each country for emergency purchases to repair disabled aircraft. (a) Use a formula to determine the purchasing power after 2, 4, and 5 years if the funds are not utilized. (b) (Spreadsheet exercise) Use a spreadsheet to plot the diminishing purchasing power curves, if assigned by your instructor. (c) With the dramatic effect of 30% inflation, if you were president of Continental Airlines, how would you manage this situation?
Continental Airlines operates in and out of many countries. Country A has a low inflation
rate of 3% per year while country B has a high rate of 30% per year. A $1 million fund is
maintained in each country for emergency purchases to repair disabled aircraft. (a) Use a
formula to determine the
utilized. (b) (Spreadsheet exercise) Use a spreadsheet to plot the diminishing purchasing
power
inflation, if you were president of Continental Airlines, how would you manage this
situation?
Inflation rate in country A : 3%
Inflation rate in country B : 30 %
Emergency fund = 1 million
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