! Required information Assume the market interest rate is 8% per year and inflation averages 5% per year. If the amounts had been quoted in CV dollars, what is the annual worth in future dollars? The annual worth in future dollars is $ 11,016 Explanation For CV dollars, first find the PW using the real rate i then, find AW using if 0.08-0.05 1+0.05 0.0285712.8571% $5000 PW = $65,000+ 0.028571 PW = $240,000 AW = $240,000 (0.08) AW = $19,200

! Required information Assume the market interest rate is 8% per year and inflation averages 5% per year. If the amounts had been quoted in CV dollars, what is the annual worth in future dollars? The annual worth in future dollars is $ 11,016 Explanation For CV dollars, first find the PW using the real rate i then, find AW using if 0.08-0.05 1+0.05 0.0285712.8571% $5000 PW = $65,000+ 0.028571 PW = $240,000 AW = $240,000 (0.08) AW = $19,200

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Required Information
Assume the market Interest rate is 8% per year and Inflation averages 5% per year.
d
If the amounts had been quoted in CV dollars, what is the annual worth in future dollars?
The annual worth in future dollars is $ 11,016
Explanation
For CV dollars, first find the PW using the real rate i then, find AW using if
i=
0.08-0.05
1+-0.05
PW =
= 0.028571 = 2.8571%
= $65,000+
PW = $240,000
$5000
0.028571
AW = $240,000 (0.08)
AW = $19,200

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