Global steel prices have a year-over-year inflationary rate increase of 12.4%. Tube Fab purchased $700,000 of a particular carbon steel during the year just ended right now, and they intend to purchase the same quantity at the end of each of the next 5 years. Tube Fab earns a real rate of 16% on their money.
Global steel prices have a year-over-year inflationary rate increase of 12.4%. Tube Fab purchased $700,000 of a particular carbon steel during the year just ended right now, and they intend to purchase the same quantity at the end of each of the next 5 years. Tube Fab earns a real rate of 16% on their money.
a) Determine the then-current amounts they will pay for steel at the end of each of the next 5 years.
b) Determine the constant value amounts they will pay for steel at the end of each of the next 5 years.
c. Determine Tube Fab's PW of expenditures over the next 5 years using then-current dollars.
d. Determine Tube Fab's PW of expenditures over the next 5 years using constant value dollars.
Include screen shots of any excel formulas used.
Step by step
Solved in 3 steps with 2 images
