Engineering Economy (17th Edition)
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 2P
To determine

Calculate the present value.

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Inflation has been a reality for the general economy of the U.S. in many years. Given this assumption, calculate the number of years it will take for the purchasing power of today’s dollars to equal onethird of their present value. Assume that inflation will average 2.5% per year.
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?
The cost of 1,000 cubic feet of natural gas has increased from $6 in 2000 to $15 in 2006. What compounded annual increase in cost is this? How does the increase in the cost of natural gas compare to a 3% annual rate of inflation during the same period of time?
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