in-11.3% PW-P14,539.69 You are considering the purchase, for P15,000, of an annuity that pays 2,500 per year for the next 10 years. You want to have a real rate of return of 5%, and you estimate inflation will average 6% per year over the Since this is less next 10 years. Should you buy the annuity? than the P15,00 initial investmen do not buy the annuity.

in-11.3% PW-P14,539.69 You are considering the purchase, for P15,000, of an annuity that pays 2,500 per year for the next 10 years. You want to have a real rate of return of 5%, and you estimate inflation will average 6% per year over the Since this is less next 10 years. Should you buy the annuity? than the P15,00 initial investmen do not buy the annuity.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Suppose you lent money to a friend a few years ago at a nominal interest rate of 6%. At the time ot he loan, you expected the annual inflation rate to be 2%, but the actual annual inflation rate was 1.2%. When the loan originated, you expected to earn a real return of but due to unexpected disinflation, you earned an actual real return of A. 2%; 1.2% OB. 4.8%; 6% C. 6%; 4.8% D. 4%; 4.8%
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?
An annuity pays $1100 per year for 13 years Inflation is 6 percent per year a. If the real MARR Is 8 percent, what is the current dollar MARR? b. Using the current dollar MARR from part (a), calculate the present worth of the annuity a. The current dollar MARR is percent (Type an integer or decimal rounded to two decimal places as needed) b. The present worth of the annuity is S (Type an integer or decimal rounded to two decimal places as needed)
MEEN1C | CLO 1 Prices of gasoline in the United States are forecast to increase by 7% in 2030. If the current average prices of gasoline in the United States stand at $3 per gallon, in 2020, What would be the average annual inflation rate over the forecast period. O The average annual rate of increase in the price of gasoline is 10% O The average annual rate of increase in the price of gasoline is 0.68% O The average annual rate of increase in the price of gasoline is 96.00% O The average annual rate of increase in the price of gasoline is 1.10%
If inflation has been running at 2.2% per year and a washing machine costs $460 today, what would it hace cost three years ago? What is the interest rate per period? i=
points Suppose that you invested 88,207AED What is the cquivalent monthly payment you must get in constant dollars? in a small engineering project at 139% (market interest rate). If the general inflation rate is expected to be oi compounded monthly.
5. Assume that relative purchasing power holds and that the inflation rate between year 1 and year 2 is 4% in the U.S. and 2% in Europe. Fill in the remaining spaces in the table. Year 1 2 (1) PUS ($) 1.5 (2) Es/e 1.2 (3) PEur(e) 1.25 (4) PEUR($) (5) qUS/EUR
Somebody has bought US Dollar with one-third of his money and Euro with one-third. The remained one-third is remained as TL. Dollar has gained value over national currency by D % each month and Euro E % each month. The average monthly inflation rate is Y. Find the percentage loss/gain of him/her at the end of a year D E Y 2,8 5,2 1,7
4. What is the uninflated present worth of a P 200 000 future value in two years if the average inflation rate is 6 and interest rate is 10% ANE
3, A man deposits P 50000 in a bank account at 6N compounded monthly for S years. If the inflation rate of 6.5% per year continues for this period, what will be the purchasing power of the original principal ater 5 years? A. PhP 39225 B. PhP 29225 C PhP 49225 D. PhP 59225
You would like to buy carcar t is currently on themarket at $85,000, but you cannot afford it right now. However, you think that youwould be able to buy it after 4 years. If the expected inflation rate as applied to the priceof this car is 6% per year, what is its expected price after 4 years?
1. A potato chips snack business existing for the past 11 years is to be sold to you by another businessman at 28 Million pesos. It is estimated to last for another 9 years with an annual predicted gross sale of 20.02 million pesos annually and yearly total cost of 1.91 million pesos. Annual inflation rate: around 3.4 to 4.6 %, T-bill rate: around 3.1 to 3.9%. a. Would you buy the said offered business? b. Why? Please show all calculations. 2. The Philippine Government has constructed a new railway system (cost of construction undisclosed). The operation of the said railway system is offered for public bidding at a minimum bid price of 110 Million pesos for a contract of 25 years. Upon diligent research, you have learned that the railways system will yield a yearly net gross income of 34.9 million pesos and a yearly maintenance cost of 3.26 million pesos. Annual average inflation rate is around 2.2 to 4.1% and T-bill rate is 3.8 to 4.3%. a. Would you participate in the bidding process?…