Engineering Economy (17th Edition)
17th Edition
ISBN: 9780134870069
Author: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher: PEARSON
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Chapter 8, Problem 12P
To determine
Calculate the
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A friend is celebrating her birthday and wants to start saving for her anticipated retirement. She has the following years to retirement and retirement spending goals.
Years until retirement:
30
Amount to withdraw each year:
$120,000
Years to withdraw in retirement:
25
Interest rate:
7.5%
Because your friend is planning ahead, the first withdrawal will not take place until one year after she retires. She wants to make equal annual deposits into her account for her retirement fund.
Assume that the inflation rate is 3%. Consequently, when your friend retires she will want to withdraw $120,000 each year in today’s dollars. What amount is she planning to receive in year 31 (the end of her first year of retirement)?
Suppose that you buy a TIPS (inflation - indexed) bond
with a 2-year maturity and a (real) coupon of 4.1% paid
annually. If you buy the bond at its face value of $
1,000, and the inflation rate is 8.15% in each year. What
will be your cash flow in year 1? Note: Do not round
intermediate calculations. Round your answer to 2
decimal places. What will be your cash flow in year 2?
Note: Do not round intermediate calculations. Round
your answer to 2 decimal places. What will be your real
rate of return over the two-year period? Note: Enter
your answer as a percent rounded to 1 decimal place.
A businessman borrows money of $ 200,000 from the bank to be repaid in three years by a single payment at a rate on interest 12% compounded annually. If the rate of inflation is 7%, what is the real rate of return.
Your answer
Chapter 8 Solutions
Engineering Economy (17th Edition)
Ch. 8 - The seasonal energy efficiency ratio (SEER) is 13...Ch. 8 - Prob. 2PCh. 8 - Prob. 3PCh. 8 - Prob. 4PCh. 8 - Prob. 5PCh. 8 - Prob. 6PCh. 8 - Prob. 7PCh. 8 - Prob. 8PCh. 8 - Prob. 9PCh. 8 - Prob. 10P
Ch. 8 - Prob. 11PCh. 8 - Prob. 12PCh. 8 - Prob. 13PCh. 8 - A commercial building design cost 89/square-foot...Ch. 8 - Prob. 15PCh. 8 - Prob. 16PCh. 8 - Prob. 17PCh. 8 - Prob. 18PCh. 8 - Prob. 19PCh. 8 - Prob. 20PCh. 8 - Prob. 21PCh. 8 - Prob. 22PCh. 8 - Prob. 23PCh. 8 - Prob. 24PCh. 8 - Prob. 25PCh. 8 - Prob. 26PCh. 8 - Prob. 27PCh. 8 - Prob. 28PCh. 8 - Prob. 29PCh. 8 - Prob. 30PCh. 8 - Prob. 31PCh. 8 - Prob. 32PCh. 8 - Prob. 33PCh. 8 - Prob. 34PCh. 8 - Prob. 35PCh. 8 - Prob. 36PCh. 8 - Prob. 37PCh. 8 - Prob. 38PCh. 8 - Prob. 39PCh. 8 - Prob. 40PCh. 8 - Prob. 41PCh. 8 - Prob. 42PCh. 8 - Prob. 43PCh. 8 - Your company manufactures circuit boards and other...Ch. 8 - Prob. 45PCh. 8 - Prob. 46PCh. 8 - Prob. 47PCh. 8 - Prob. 48PCh. 8 - Prob. 49SECh. 8 - Prob. 50SECh. 8 - Prob. 51SECh. 8 - Prob. 52CSCh. 8 - Suppose the cost of electricity is expected to...Ch. 8 - Prob. 54CSCh. 8 - Prob. 55FECh. 8 - Prob. 56FECh. 8 - Prob. 57FECh. 8 - Prob. 58FECh. 8 - Prob. 59FECh. 8 - Prob. 60FECh. 8 - Prob. 61FE
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- Mary will earn $42,544 this year and $21,839 next year. The real interest rate is 15% between this year and next year; she can borrow or lend at this rate. She has no wealth at the start of this year and plans to finish next year having consumed everything she possibly can. She would like to consume the same amount this year as next year. The inflation rate is 0%. How much should Mary save?arrow_forwardThe inflation over four consecutive quarter is fl=1%,f2=0.5%, fs-0.5%, f-196. what is the inflation for the entire year?arrow_forwardThe average price of gasoline in 2005 was $ 2.31 per gallon. In 1993, the average price was $1.07. The average annual rate of increase in the price of gasoline over this 12-year period is 6.62%. If we assume that the price of gasoline will continue to inflate at this rate, how long will it be before we are paying $6.73 per gallon?arrow_forward
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