Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 11, Problem 1P
To determine
Calculate the inflation rate.
Expert Solution & Answer
Explanation of Solution
Time period is denoted by n, interest rate is denoted by i, and inflation rate is denoted by f.
Inflation rate can be calculated as follows.
Inflation rate is 5.9874%.
Want to see more full solutions like this?
Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
If the Consumer Price Index was 155 in one year and 165 in the next year, then the
rate of inflation from one year to the next was approximately:
6.5%
10%
6.1%
-6.5%
In 2000, the value of the Consumer Price Index was 171.20 and the price of gasoline (per gallon) was $1.56. Six years later in 2006, the value
of the Consumer Price Index was 200.43 and the price of gasoline (per gallon) was $2.56.
What was the specific inflation rate for gasoline during this period?
An engineer's salary was $40,000 in 2004. The same engineer's salary in 2011 is $75,000. If the company's salary policy dictates that a yearly raise in salaries reflect the cost of Jiving increase due to inflation, what is the average inflation rate for the period 2004-2012?
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
Knowledge Booster
Similar questions
- If the Consumer Price Index was 107 in one year and 104 in the following year, then the rate of inflation was approximatelyarrow_forwardIf the consumer price index increases from 200 to 240 in a one-year period, then the inflation rate is A 16.67 percent 20 percent 25 percent 40 percent 140 percent 0arrow_forwardOver 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.arrow_forward
- Suppose Frances is an avid reader and buys only mystery novels. Frances deposits $2,000 in a bank account that pays an annual nominal interest rate of 15%. Assume this interest rate is fixed-that is, it won't change over time. At the time of her deposit, a mystery novel is priced at $20.00. Initially, the purchasing power of Frances's $2,000 deposit is mystery novels. For each of the annual inflation rates given in the following table, first determine the new price of a mystery novel, assuming it rises at the rate of inflation. Then enter the corresponding purchasing power of Frances's deposit after one year in the first row of the table for each inflation rate. Finally, enter the value for the real interest rate at each of the given inflation rates. Hint: Round your answers in the first row down to the nearest mystery novel. For example, if you find that the deposit will cover 20.7 mystery novels, you would round the purchasing power down to 20 mystery novels under the assumption that…arrow_forwardIf the Consumer Price Index was 155 in one year and 165 in the next year, then the rate of inflation from one year to the next was approximately: Group of answer choices 6.5% -6.5% 6.1% 10%arrow_forwardQuestion 7 The price of a product was $0.88 in the year 2008 and $1.28 in the year 2018. What is the average annual inflation rate for this product? 3.82 % 3.68% 3.42 % 3.98 % Question 8 If the CPI for January 2008 is 208.837 and the CPI for December 2018 is 255.539, what is the average annual inflation rate (per year) from Jan 2008 to Dec 2018? (Hint: Calculate monthly inflation rate and then use annual effective interest rate) O 1.65 % ☐ 1.75% O 1.95 % O 1.85 %arrow_forward
- Calculate the annual inflation-adjusted interest rate, if the general inflation rate is ? 2% per year, and the interest rate is 3.5% per yeararrow_forwardThe cost of first-class postage has risen by about 5% per year over the past 30 years. The U.S. Postal Service introduced a one-time forever stamp in 2008 that cost 41 cents for first-class postage (one ounce or less), and it will be valid as first-class postage regardless of all future price increases. Let’s say you decided to purchase 1,000 of these stamps for this one-time special rate. Assume 5% inflation and your personalMARR is 10% per year (im). Did you make a sound economical decision?arrow_forwardSuppose Eileen is an avid reader and buys only comic books. Eileen deposits $4,000 in a bank account that pays an annual nominal interest rate of 5%. Assume this interest rate is fixed-that is, it won't change over time. At the time of her deposit, a comic book is priced at $10.00. Initially, the purchasing power of Eileen's $4,000 deposit is comic books. For each of the annual inflation rates given in the following table, first determine the new price of a comic book, assuming it rises at the rate of inflation. Then enter the corresponding purchasing power of Eileen's deposit after one year in the first row of the table for each inflation rate. Finally, enter the value for the real interest rate at each of the given inflation rates. Hint: Round your answers in the first row down to the nearest comic book. For example, if you find that the deposit will cover 20.7 comic books, you would round the purchasing power down to 20 comic books under the assumption that Eileen will not buy…arrow_forward
- Calculate the implied annual inflation rate from a market interest rate of 15.75% per year and a real interest rate of 15.67% per year.arrow_forwardPrices for fresh fruit went up 9% last year and 3% this year. What is the average inflation rate percentage for fresh fruit over the 2-year period? Enter your answer as a percentage rounded to the nearest tenth of a percent.arrow_forwardIf the price of a good is $200 in 2015 and $204 in 2019, what is the inflation rate? A) 22% B) 20% C) 2% D) 200%arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning