ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Suppose you'll have an annual nominal income of $20,000 for each of the next three years, and the inflation rate is 5 percent per year.
Hint: Present value = Future value = (1 + Growth in prices)*
=
Real value of next year's income = Next year's income ÷ (1+ Growth in prices)
Instructions: Round your responses to the nearest whole dollar.
a. Find the real value of your $20,000 salary for each of the next three years.
Year 1: $
Year 2: $
Year 3: $
b. If you have a COLA in your contract, what is the real value of your salary for each year?
Year 1: $
19047
Year 2: $
18144
Year 3: $
17276
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Transcribed Image Text:Suppose you'll have an annual nominal income of $20,000 for each of the next three years, and the inflation rate is 5 percent per year. Hint: Present value = Future value = (1 + Growth in prices)* = Real value of next year's income = Next year's income ÷ (1+ Growth in prices) Instructions: Round your responses to the nearest whole dollar. a. Find the real value of your $20,000 salary for each of the next three years. Year 1: $ Year 2: $ Year 3: $ b. If you have a COLA in your contract, what is the real value of your salary for each year? Year 1: $ 19047 Year 2: $ 18144 Year 3: $ 17276
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