Suggested problems_Chp 8_sol

# Suggested problems_Chp 8_sol - Suggested problems for...

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Suggested problems for Chapter 8 – Solutions 1. (8.3) f = 4% per year; How long until \$1 (actual) will be worth \$0.50 (real) in today's purchasing power? From Equation 8-1, with k = 0, we have (R\$) N = \$0.50 = (\$1) N ) 04 . 1 ( 1 (1.04) N = 2 N (ln (1.04)) = ln (2) N = ) 04 . 1 ln( ) 2 ln( 18 years In 18 years, the dollar's purchasing power will be one-half of what it is now if the general price inflation rate is 4% per year. 2. (8.9) By using Equation 8-1, but with each year's general price inflation taken into account separately , the R\$ equivalents in year 0 dollars are calculated as follows. EOY Salary (R\$ in Year 0) 1 \$34,000 (P/F,2.4%,1) \$34,000 1 (1 0.024) = \$33,203 2 \$36,200 (P/F,2.4%,1)(P/F,1.9%,1) \$36,200 1 (1 0.024) 1 (1 0.019) = \$34,692 3 \$38,800 (P/F,2.4%,1)(P/F,1.9%,1)(P/F,3.3%,1) \$38,800 1 (1 0.024) 1 (1 0.019) 1 (1 0.033) = \$35,996 4 \$41,500 (P/F,2.4%,1)(P/F,1.9%,1)(P/F,3.3%,1)(P/F,3.4%,1) \$41,500 1 (1 0.024) 1 (1 0.019) 1 (1 0.033) 1 (1 0.034) = \$37,235

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3. (8.11) The electricity bill is \$400M in year 0 and \$920M in year 10. This difference in cost
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## This note was uploaded on 02/07/2012 for the course IE 343 taught by Professor Vincent,g during the Spring '08 term at Purdue.

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Suggested problems_Chp 8_sol - Suggested problems for...

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