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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 thencurrent dollars of year 10 if the inflation rate is7%
per year.
Chapter 14, Problem 5.
Convert $10,000 future dollars in year 10 into
constantvalue dollars
(not equivalent dollars)
of today if the inflationadjusted (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
constantvalue dollars
(not equivalent dollars)
today if the inflationadjusted (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 (thencurrent 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.
 Winter '11
 Panzer

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