Engineering Economic Analysis
Engineering Economic Analysis
13th Edition
ISBN: 9780190296902
Author: Donald G. Newnan, Ted G. Eschenbach, Jerome P. Lavelle
Publisher: Oxford University Press
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Chapter 7A, Problem 8P
To determine

The rate of return.

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3. Uncle Mateo loves shoes and high unemployment. Uncle Mateo owns a small shoe factory in Argentina. His business is doing fairly well, especially because prices in Argentina have been falling, including the cost of labor too, since August of 2024. The date is September 1, 2024, and uncle Mateo texted you the following message in an effort to seek your advice about a new policy the government there is intending to implement to deal with high unemployment rates that started to creep up in early 2024: "Hola (hello) dear niece, As you know, prices in Argentina have been falling recently, which is great because I can now hire more people and buy material cheaper than I used to. Also, I was able to find more workers at lower pay because this unemployment rate has been rising. However, some crazy government people want to change things. I don’t know exactly how their ideas will affect me in the long run, but I am worried. They basically want to lower the unemployment rate, and I might have…
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2. Every time we start to have fun, the government ruins it! You run a construction company where you build residential homes. For the past 3 years, demand for new homes has risen significantly, and your company tripled its size. The main driver for the rise in demand is high GDP growth. People are making good incomes, and they are demanding more houses. The positive outlook many people have about the economy makes you believe that you need to expand your business even further to another state, which requires you to open an office there and hire at least 50 people. While sitting with your family in the evening enjoying some sweets and watching TV, you heard the news reporter state the following: "The central bank has decided to raise interest rates to influence consumer spending to try to control inflation. The economy has been doing very well for 3 consecutive years, and economic growth is still accelerating, which could lead to a spike in prices." Your spouse, who was watching TV…
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