A company has the option of building a warehouse now or building in three years from now. The cost now would be $400,000, but three years from now the cost will be $500,000. If the company minimum attractive rate of return (real) is 12% per year and the inflation rate is 10% per year, the present worth cost of the building in three years when inflation is considered is closed to: A. $268 700 (Answer) B. $355,900 C. $357,650 D. $402,700

A machine currently under consideration by Marcus Industries has a cost of $31, 000. When the purchasing manager complained that a similar machine the company purchased 5 years ago was much cheaper, the salesman responded that the cost of the machine has increased solely in accordance with the inflation rate, which has averaged 5% per year. When the purchasing manager checked the invoice for the machine he purchased 5 years ago, he saw that the price was $25,000. Was the salesman telling the truth about the increase in the cost of the machine? What should the machine cost now, provided the price increased by only the inflation rate? Use the formula

Calculate the inflation-adjusted interest rate when the annualized inflation rate is 7% per yar and the real interest rate is 4% per year..

Required information To retire at a decent age and move to Hawaii, an engineer plans to trust her account to an investment firm that promises to make a real rate of return of 10% per year when the inflation rate is 4.000% per year. The account currently is valued at $520,000 and she wants to retire in 15 years. Determine how much (in then-current dollars) will be in the account for the realized rate of return to be a real 10% per year. (Round the final answer to three decimal places.) The account should have $

2. An independent contractor is trying to decide whether to lease new equipment now or save his money and purchase it in 5 years' time when he is able to fully pay for the equipment without interest. The cost of the equipment is $73,000 if leased or $85,000 if purchased 5 years from now. At a real MARR of 10% per year and an inflation rate of 4% per year, determine if the company should lease it now or wait and purchase later (a) without any adjustment for inflation and (b) with inflation considered.