problemset08

# problemset08 - ECN801 Problem Set 8 Chapter 14, Problem 2....

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ECN801 – Problem Set 8 Chapter 14, Problem 2. What is the inflation rate if something costs exactly twice as much as it did 10 years earlier? Chapter 14, Problem 4. Convert \$10,000 present dollars into then-current dollars of year 10 if the inflation rate is7% per year. Chapter 14, Problem 5. Convert \$10,000 future dollars in year 10 into constant-value dollars (not equivalent dollars) of today if the inflation-adjusted (market) interest rate is 11% per year and the inflation rate is 7% per year. Chapter 14, Problem 6. Convert \$10,000 future dollars in year 10 into constant-value dollars (not equivalent dollars) today if the inflation-adjusted (market) interest rate is 12% per year and the real interest rate is 3% per year. Chapter 14, Problem 7. Estimated costs for maintenance and operation of a certain machine are expected to be\$13,000 per year (then-current dollars) in years 1 to 3. At an inflation rate of 6% per year, what is the constant- value amount (in terms of today’s dollars) of
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## This note was uploaded on 09/24/2011 for the course CPS 125 taught by Professor Panzer during the Winter '11 term at Ryerson.

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