Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
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Chapter 11, Problem 11P
To determine
Calculate the actual and constant dollar.
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Over the next year, the inflation rate will be 6%, while the nominal interest rate is 2% per year. What is the real
value of $1,000 received one year from now? (That is, what amount of money now gives you the same
purchasing power as $1000 in one year.)
Round to two decimal places and do not enter the $ sign. If your answer is $1.333, enter 1.33. If your answer is
$1.666, enter 1.67. If appropriate, remember to enter the - sign.
A father wants to save in advance for his eight-year-old daughter's college expenses. The daughter will enter the college 10 years from now. An annual amount of $20,000 in today's dollars (constant dollars) will be required to support her college expenses for four years. Assume that these college payments will be made at the beginning of each school year. (The first payment occurs at the end of 10 years.) The future general inflation rate is estimated to be 5% per year, and the interest rate on the savings account will be 8% compounded quarterly (market interest rate) during this period. If the father has decided to save only $500 (actual dollars) each quarter, how much will the daughter have to borrow to cover her freshman expenses?
A. $2,683
B. $3,128
C. $2,377
D. $1,895
The current gasoline price is 5$ per gallon, and it is projected to increase next year by 5%, 8% the
following year, and 3 % the third year. What is the average inflation rate for the projected gasoline
price for the next three years
Chapter 11 Solutions
Contemporary Engineering Economics (6th Edition)
Ch. 11 - Prob. 1PCh. 11 - Prob. 2PCh. 11 - Prob. 3PCh. 11 - Prob. 4PCh. 11 - Prob. 5PCh. 11 - An annuity provides for 10 consecutive end-of-year...Ch. 11 - Prob. 7PCh. 11 - Prob. 8PCh. 11 - Prob. 9PCh. 11 - Prob. 10P
Ch. 11 - Prob. 11PCh. 11 - Prob. 12PCh. 11 - Prob. 13PCh. 11 - Prob. 14PCh. 11 - Prob. 15PCh. 11 - Prob. 16PCh. 11 - Prob. 17PCh. 11 - Prob. 18PCh. 11 - Prob. 19PCh. 11 - Prob. 20PCh. 11 - Prob. 21PCh. 11 - Prob. 22PCh. 11 - Prob. 23PCh. 11 - Prob. 24PCh. 11 - Prob. 25PCh. 11 - Prob. 26PCh. 11 - Prob. 27PCh. 11 - Prob. 28PCh. 11 - Prob. 29PCh. 11 - Prob. 30PCh. 11 - Prob. 31PCh. 11 - Prob. 1STCh. 11 - Prob. 2STCh. 11 - Prob. 3ST
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