i need a and b answer. 9: Assume the market interest rate is 8% per year and inflation averages 5.8% per year. a) Calculate the perpetual equivalent annual worth in future dollars for years 1 through ∞ for an income of $73,000 now and $5000 per year thereafter. b) If the amounts had been quoted in CV dollars, what is the annual worth in future dollars?

i need a and b answer. 9: Assume the market interest rate is 8% per year and inflation averages 5.8% per year. a) Calculate the perpetual equivalent annual worth in future dollars for years 1 through ∞ for an income of $73,000 now and $5000 per year thereafter. b) If the amounts had been quoted in CV dollars, what is the annual worth in future dollars?

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter2: The One Lesson Of Business

Section: Chapter Questions

Problem 2.6IP

See similar textbooks

Similar questions

How much money can the Eastman Land and Cattle Company afford to spend now for a tractor trailer in lieu of spending $69,000 three years from now, if the interest rate is 13% per year and the inflation rate is 6.1% per year? NOTE: This is a multi-part question. Once an answer is submitted, you will be unable to return to this part. Solve by factors. The Eastman Land and Cattle Company can afford to spend $ .
A man desires to have a preplanned amount in a savings account when he retires in 20 years. This amount is to be equivalent to $30,000 in today’s purchasing power. If the expected average inflation rate is 7% per year and the savings account earns 5% interest, what lump sum of money should the man deposit now in his savings account?
Assume your salary is $55,000 in 2015 and $160,000 in 2045. If inflation has averaged 2% per year, what is the real or differential inflation rate of salary increases?
Required information In wisely planning for your retirement, you invest $34,000 per year for 20 years into a 401K tax-deferred account. Assume you make a real return of 10% per year when the inflation rate averages 3.3% per year. How many future dollars will you have in the account immediately after your last deposit? You will have $ | future dollars in your account immediately after your last deposit.
Jeff just received a refund of $2,178 from his family physician. This was anoverpayment on his account, and it has been three years since the overpayment was due. Jeff is really frosted by this delay! What is the purchasing power now (year 0) of the overpayment if inflation has been 4%, 3%, and 2%, respectively, in years −3 (three years ago), −2 (two years ago), and −1 (last year)?
In wisely planning for your retirement, you invest $27,000 per year for 20 years into a 401K tax-deferred account. Assume you make a real return of 10% per year when the inflation rate averages 2.6% per year. How much will you be able to withdraw each year for 18 years, starting one year after your last deposit? The amount that you will be able to withdraw each year is $
The current gasoline price is 5$ per gallon, and it is projected to increase next year by 5%, 8% the following year, and 3 % the third year. What is the average inflation rate for the projected gasoline price for the next three years
1. Consider a real return bond with a face value of $15,000 and a coupon yield of 5.2%. What is the coupon payment after one year if the inflation rate is 6.8%? Select one: Ia) $817.44 b) $833.04 c) $825.24 d) $809.64
Darren and Susan want to provide funding for their daughter Jerri, age 10, to attend four years of college, starting at age 18. The current annual cost of tuition is $19,000. Assume inflation of 6% and after-tax earnings of 5%. If the couple wants to have enough life insurance to assure adequate funds for Jerri when she begins college (should Darren die today), approximately what amount of life insurance covering Darren is needed for the college funding? (Round your answer to the nearest dollar.) A)$80,835 B)$83,166 C)$83,958 D)$80,071
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.)<
Suppose 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?
ShaNey saw that the campus bookstore is having a special on pads of computation paper normally priced at $3.75 a pad, now on sale for $3.50 a pad. This sale is unusual and ShaNey assumes the paper will not be put on sale again. On the other hand, she expects that there will be no increase in the $3.75 regular price, even though the inflation rate is 0.75% every 3 months. ShaNey believes that competition in the paper industry will keep wholesale and retail prices constant. She uses a pad of computation paper every 3 months. ShaNey considers 9% a suitable minimum attractive rate of return. ShaNey will buy one pad of paper for her immediate needs. How many extra pads of computation paper should she buy?