Engineering Economy, Student Value Edition (17th Edition)
17th Edition
ISBN: 9780134838137
Author: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 8, Problem 58FE
To determine
Calculate the present worth.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Due to the integrated nature of their capital markets, investors in both the U.S. and U.K. require the same real interest rate, 3.2%, on their lending. There is a consensus in capital markets that the annual inflation rate is likely to be 2.1% in the U.S. and 3.6% in the U.K. for the next three years. The GBP/USD rate is currently 1.3081. What is your expected future spot for GBP/USD three years from now? (X.XXXX)
James is considering a project which would cost $10,000 now. The annual
benefits, for 4 years, would be a fixed income of $3,500 a year, plus other savings
of $500 a year in year 1, rising by 5% each year because of inflation. Running
costs will be $1,300 in the first year, but would increase at 10% each year
because of inflating labour costs. The general rate of inflation is expected to be
71% and the company's required money rate of return is 16%. Is the project
worthwhile? (Ignore taxation.)<
complete answer, thank you.
Chapter 8 Solutions
Engineering Economy, Student Value Edition (17th Edition)
Ch. 8 - The seasonal energy efficiency ratio (SEER) is 13...Ch. 8 - Prob. 2PCh. 8 - Prob. 3PCh. 8 - Prob. 4PCh. 8 - Prob. 5PCh. 8 - Prob. 6PCh. 8 - Prob. 7PCh. 8 - Prob. 8PCh. 8 - Prob. 9PCh. 8 - Prob. 10P
Ch. 8 - Prob. 11PCh. 8 - Prob. 12PCh. 8 - Prob. 13PCh. 8 - A commercial building design cost 89/square-foot...Ch. 8 - Prob. 15PCh. 8 - Prob. 16PCh. 8 - Prob. 17PCh. 8 - Prob. 18PCh. 8 - Prob. 19PCh. 8 - Prob. 20PCh. 8 - Prob. 21PCh. 8 - Prob. 22PCh. 8 - Prob. 23PCh. 8 - Prob. 24PCh. 8 - Prob. 25PCh. 8 - Prob. 26PCh. 8 - Prob. 27PCh. 8 - Prob. 28PCh. 8 - Prob. 29PCh. 8 - Prob. 30PCh. 8 - Prob. 31PCh. 8 - Prob. 32PCh. 8 - Prob. 33PCh. 8 - Prob. 34PCh. 8 - Prob. 35PCh. 8 - Prob. 36PCh. 8 - Prob. 37PCh. 8 - Prob. 38PCh. 8 - Prob. 39PCh. 8 - Prob. 40PCh. 8 - Prob. 41PCh. 8 - Prob. 42PCh. 8 - Prob. 43PCh. 8 - Your company manufactures circuit boards and other...Ch. 8 - Prob. 45PCh. 8 - Prob. 46PCh. 8 - Prob. 47PCh. 8 - Prob. 48PCh. 8 - Prob. 49SECh. 8 - Prob. 50SECh. 8 - Prob. 51SECh. 8 - Prob. 52CSCh. 8 - Suppose the cost of electricity is expected to...Ch. 8 - Prob. 54CSCh. 8 - Prob. 55FECh. 8 - Prob. 56FECh. 8 - Prob. 57FECh. 8 - Prob. 58FECh. 8 - Prob. 59FECh. 8 - Prob. 60FECh. 8 - Prob. 61FE
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Similar questions
- The tuition in a private university was $25,000 per academic year in 1999. If the inflation rate has been averaging at the rate of 3%, how much one should have invested in 1999 to send a kid to this private university in 2017. Assume the investment earned an 8% return. Answer Options: $10,649 $12,156 $14,027 $13,252arrow_forwardBecause retail supermarket corporations operate on a low ROR, it is common to use a market MARR of about 3% per year. What real return rate is implied from a market interest rate of 3% per year when the annual inflation rate is 4% per year? Explain your answerarrow_forwardTwo alternatives, A and B are under consideration. Both have a life of five years. Alternative A needs an initial investment of $17,000 and provides annual net revenue of $4,000 per year for five years. Alternative B requires an investment of $19,000 and has annual net revenue of $5,000. All estimates are in actual dollars. Inflation is expected to be 2% per year for the next five years, and the inflation-free (real) MARR is 9.8% per year. a) What is the PW(A$) of alternative A? b) What is the PW(A$) of alternative B? c) What is the market interest rate adjusted for inflation?arrow_forward
- Factors that increase costs and prices—especially for materials and manufacturing costs sensitive to market, technology, and labor availability—can be considered separately using the real interest rate, i, the inflation rate, f, and additional increases that grow at a geometric rate, g (commonly due to maintenance and repair cost increases as machinery ages). The future amount is calculated based on a current estimate by using the relation: F = P(1 + i)n (1 + f )n (1 + g)n = P[(1 + i) (1 + f ) (1 + g)]n The current cost to manufacture an electronic subcomponent is $145,000 per year. Provided the average annual rates for i, f, and g are 8%, 4%, and 3%, respectively, determine the equivalent future cost (a) in 3 years, and (b) in 8 years.arrow_forwardCalculate the present worth of $35,000 to be received 6 years from now, if the predicted real rate of return is 15% per year and the inflation rate is 10% per year. The present worth of $35,000 is $ .arrow_forwardDue to inflation in Australia in December 2019, the price for petrol increased from AUD 1.35 to AUD 1.45. This caused petrol consumption to decrease from 2500 litres to 2450 litres at a 7-Eleven Petrol Station in Sydney. Also, when the price for Hyundai 7.5kW Inverter Split System Air Conditioner (Reverse Cycle) increased from AUD 950.00 to AUD 990.00; demand for these air conditioners fell from 2500 units to 2000 units. Following this condition, answer the questions below.i. Using the mid-point formula calculate the price elasticity of demand for petroland Hyundai 7.5kW Inverter Split System Air Conditioner (Reverse Cycle). ii. Is the price elasticity of demand: elastic, unit elastic or inelastic for eachcommodity (petrol and Hyundai 7.5kW Inverter Split System Air Conditioner (Reverse Cycle)? iii. Suppose the government decides to increase tax for petrol and Hyundai 7.5kWInverter Split System Air Conditioner (Reverse Cycle). Use two diagrams to explain the incidence of the tax…arrow_forward
- Due to inflation in Australia in December 2019, the price for petrol increased from AUD1.35 to AUD 1.45. This caused petrol consumption to decrease from 2500 litres to 2450 litres at a 7-Eleven Petrol Station in Sydney.Also, when the price for Hyundai 7.5kW Inverter Split System Air Conditioner (ReverseCycle) increased from AUD 950.00 to AUD 990.00; demand for these air conditioners fell from 2500 units to 2000 units.Following this condition, answer the questions below.i. Using the mid-point formula calculate the price elasticity of demand for petroland Hyundai 7.5kW Inverter Split System Air Conditioner (Reverse Cycle). ii. Is the price elasticity of demand: elastic, unit elastic or inelastic for eachcommodity (petrol and Hyundai 7.5kW Inverter Split System Air Conditioner(Reverse Cycle)? iii. Suppose the government decides to increase tax for petrol and Hyundai 7.5kWInverter Split System Air Conditioner (Reverse Cycle). Use two diagrams toexplain the incidence of the tax increase for…arrow_forwardA father wants to save for his eight-year-old son's college expenses. The son will enter college 10 years from now. An annual amount of $40,000 in constant dollars will be required to support the son's college expenses for four years. Assume that these college payments will be made at the beginning of each school year. The future general inflation rate is estimated to be 6% per year, and the market interest rate on the savings account will average 8% compounded annually.(a) What is the amount of the son's freshman-year expense in terms of actual dollars?(b) What is the equivalent single-sum amount at the present time for these college expenses?(c) What is the equal amount, in actual dollars, the father must save each year until his son goes to college?arrow_forwardA series of four annual constant-dollar payments beginning with $50,000 at the end of the first year is growing at the rate of 8% per year. Assume that the base year is the current year (n = 0). If the market interest rate is 13% per year and the general inflation rate is 7% per year, find the present worth of this series of payments, based on (a) constant-dollar analysis. (b) actual-dollar analysis.arrow_forward
- Better Corporation can purchase a piece of equipment now for $120,000 or buy it 4 years from now for $188,000. The MARR requirement for the plant is a real return of 14% per year. If an inflation rate of 6% per year must be accounted for, what is the Future Value with inflation? a) $188,000 b) $255,873 c) $ 88,169 d) $120,000 Should the company buy the machine now or later? a) Now b) Laterarrow_forwardFor many years, college costs (including tuition, fees, and room and board) increases have been higher than the inflation rate, averaging 5% to 8% per year. According to the Collège Board's Trends in College Pricing, the average total costs at present in dollars is $19,500 for students attending in-state four-year public colleges and universities and $44,500 for students at four-year private colleges and universities. Assume an additional $4,800 per year for textbooks, supplies, transportation, and other expenses. What is the estimated total cost for the second year at a university if textbooks, supplies, etc. also increase at 7% per year? Assume the student's freshman year is 3 years from now. The estimated total cost for the second year at a university is $78080arrow_forwardSuppose you have $100,000 cash today and you can invest it to become a millionaire in 15 years. What is the present purchasing power equivalent of this $1,000,000 when the average inflation rate over the first seven years is 5% per year, and over the last eight years it will be 8% per year?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSON
Engineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher: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
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education