Suppose that you borrow $20,000 at 12%, compounded monthly, over 5 years. Knowing that the 12% represents the market interest rate, the monthly payment in actual dollars will be $444.90. If the average monthly general inflation rate is expected to be 0.5%, what is the equivalent equal monthly payment series in constant dollars? A. $386 B. $486 C. $345 D. $445
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- Rosalie the Retiree knows that when she retires in 16 years, her company will give her a one-time payment of 20,000. However, if the inflation rate is 6 per year, how much buying power will that 20,000 have when measured in todays dollars? Hint: Start by calculating the rise in the price level over the 16 years.If the Consumer Price Index (CPI) for one year was 150 and for the next year it was 157.5, the inflation rate from one year to the next is % 6.5% 5 5.0% 7.5% O 6.0% 16 < 4- 6 f7 4+ & 7 hp fg KAA 8 fg DII 9 f10 W DDIThe following table shows the annual inflation rates in several Latin American countries in October 2015 (unless otherwise noted). Assume that the rates shown continue indefinitely. Country Argentina Brazil Bolivia Nicaragua Venezuela Mexico Uruguay Currency Peso Real Boliviano Gold cordoba Bolivar Peso Peso Inflation Rate(%) 14.3 9.9 4.3 3.0 68.5 2.5 9.2 If an item in Brazil now costs 300 reals, what do you expect it to cost 7 years from now? (Round your answer to the nearest real.) reals
- You would like to buy a house that is currently on themarket at $15,000, but you cannot afford it right now. However, you think that youwould be able to buy it after 15 years. If the expected inflation rate as applied to the priceof this house is 8% per year, what is its expected price after four years?Shea is pricing materials (wood, wire, pipe, etc.) for new home construction on a “per unit” basis. Inflation on materials has been running at 16.0% for the past 3 years and is expected to remain at that rate for the next 10 years. The actual dollars paid for expenses at the end of year 3 for a “unit” are $55,000. Solve, a. What did the same set of materials cost 3 years ago? b. If the trend continues, what will they cost 10 years from now?Assume a constant inflation rate of 5% annually and 0% interest rate. Over a whole period of 14 years. A real estate investment after 4 years would consume 307,500$. Lasting to 10 years the income is a constant of 170,000$ each year. A) What would be the equivalence selling price for the real estate in year 0?
- 4.26 A couple wants to save for their daughter's college expense. The daughter will enter college eight years from now, and she will need $50,000, $51,000, $52,000. and $53,000 in actual dollars for four school 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 7% per year, and the annual inflation-free inter- est rate is 6%. (a) What is the market interest rate to use in the analysis? (b) What is the equal amount, in actual dollars, the couple must save each year until their daughter goes to college?X₁ 4) If the effective annual interest rate is 9% per year and inflation is 3.8% per year what is the true annual interest rate? annual interest rate = effm = (1 + 0.091) nomiral= 0.7207 12 = 8.6484- anal interest rate= 13,8\8,6484 = 12.4481, nomiral tinflation = 0.007 207 ~ 0,7207 1 monthlySuppose that yearly inflation for 2020, 2021 and 2022 are 20%, 25% and 20% respectively. If the consumer price index (CPI) is 220TL at the beginning of 2020, what will it be after 3 years?
- Tuition at xyz this year cost $61,170. If the inflation rate is 2% for the foreseeable future anfd if the cost of attending XYZ rises at the rate of inflation, what will it cost in 20 years to attend XYZ for 1 year? For 4 years (2038-2042)?Year price of meat (per Kg) price of bread price of gas (per Kg) (per It) housing price (monthly rent of 1 bd unit) $1000 1 $10 $20 $1.5 2 $12 $18 $1.5 $1200 Suppose a consumer basket consists of 40 Kg meat, 50 Kg bread, 400 It gas, and a one bedroom apartment for one year. Using the table above, compute the inflation rate in this economy based on CPI between years 1 and 2. 17% 12% 6% 10%8:30 Johnson Thermal Products uses austenitic nickel-chromium alloys to manufacture resistance heating wire. The company is considering a new annealing-drawing process to reduce costs. If the new process will cost $2.5 million now, how much must be saved each year to recover the investment in 5 years if the company's MARR is a real 10% per year and the inflation rate is 3.5% per year? The amount to be saved each year to recover the investment is $ (Enter your answer in dollars and not in millions of dollars.)