four-year project requires $1 000 000 as the first cost and brings $2 000 000 at the end of the fourth year. If expected annual inflation over this period is 5%, what is the real IRR of this project ? 13.3% 18.9% 47.6% 27.6%

Required Information Assume the market Interest rate is 8% per year and Inflation averages 5% per year. d If the amounts had been quoted in CV dollars, what is the annual worth in future dollars? The annual worth in future dollars is $ 11,016 Explanation For CV dollars, first find the PW using the real rate i then, find AW using if i= 0.08-0.05 1+-0.05 PW = = 0.028571 = 2.8571% = $65,000+ PW = $240,000 $5000 0.028571 AW = $240,000 (0.08) AW = $19,200

Required information For 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 College Board's Trends in College Pricing, the average total costs at present in dollars is $22,000 for students attending in-state four-year public colleges and universities and $41,500 for students at four-year private colleges and universities. Assume an additional $4,300 per year for textbooks, supplies, transportation, and other expenses. Using a 7% per year inflation rate, how much can a sophomore high-school student expect to spend on in-state tuition, fees, and room and board for the freshman year (3 years from now) at a four-year public university? (Round the final answer to three decimal places.) A sophomore high-school student is expected to spend $ for the freshman year.

United Pigpen is considering a proposal to manufacture high-protein hog feed. The project would make use of an existing warehouse, which is currently rented out to a neighboring firm. The next year's rental charge on the warehouse is $135,000, and thereafter, the rent is expected to grow in line with inflation at 4% a year. In addition to using the warehouse, the proposal envisages an investment in plant and equipment of $1.41 million. This could be depreciated for tax purposes straight-line over 10 years. However, Pigpen expects to terminate the project at the end of 8 years and to resell the plant and equipment in year 8 for $470,000. Finally, the project requires an immediate investment in working capital of $385,000. Thereafter, working capital is forecasted to be 10% of sales in each of years 1 through 7. Year 1 sales of hog feed are expected to be $4.90 million, and thereafter, sales are forecasted to grow by 5% a year, slightly faster than the inflation rate. Manufacturing costs…