EEE463_Homework2_Solution_F07

EEE463_Homework2_Solution_F07 - 1. Using data from DOE’s...

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Unformatted text preview: 1. Using data from DOE’s Annual Energy Review, plot the nominal prices of natural gas from 1980 through 2006 for both the residential and electric power sectors on the same graph. Nominal Price ($/100 cubic-feet) Solution The raw data originates from Table 6.8 of the AER. Plotting the data results in 16 14 12 10 Residential Electric Power 8 6 4 2 0 1980 1985 1990 1995 Year 2000 2005 K.E. Holbert 8/31/2007 Brute Force Method in Excel Cal. Year Empl. Yr 2008 1 2009 2 2010 3 2011 4 2012 5 2013 6 2014 7 2015 8 2016 9 2017 10 2018 11 2019 12 2020 13 2021 14 2022 15 2023 16 2024 17 2025 18 2026 19 2027 20 2028 21 2029 22 2030 23 2031 24 2032 25 2033 26 2034 27 2035 28 2036 29 2037 30 2038 31 2039 32 2040 33 2041 34 2042 35 2043 36 2044 37 2045 38 2046 39 2047 40 Total of all 40 yrs: Sum of Yrs 31-40: EEE463-Homework Salary $50,000.00 $51,750.00 $53,561.25 $55,435.89 $57,376.15 $59,384.32 $61,462.77 $63,613.96 $65,840.45 $68,144.87 $70,529.94 $72,998.49 $75,553.43 $78,197.80 $80,934.73 $83,767.44 $86,699.30 $89,733.78 $92,874.46 $96,125.07 $99,489.44 $102,971.57 $106,575.58 $110,305.72 $114,166.42 $118,162.25 $122,297.93 $126,578.36 $131,008.60 $135,593.90 $140,339.69 $145,251.57 $150,335.38 $155,597.12 $161,043.02 $166,679.52 $172,513.31 $178,551.27 $184,800.57 $191,268.59 $4,227,513.89 $1,646,380.02 Refined Method Using Excel FV Functions Base Data Initial Salary (Present Value) = Escalation factor (interest rate) Number of years (periods) = $50,000.00 0.035 39 (a) Results using th FV function Salary in the 40th year = $191,268.59 (b) Results using FV function Total earnings by the 40th yr = Total earnings by the 30th yr = Total earnings in yrs 30-40 = $4,227,513.89 $2,581,133.86 $1,646,380.02 I'm intentionally not showing the FV function with the arguments filled in, so that I encourage you to try it. Essentially all the arguments are the base data. If you can't figure it out, then let me know and I'll share the solution with you. Financial Page 1 of 1 ...
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This note was uploaded on 02/11/2012 for the course EEE 463 taught by Professor Holbert during the Spring '08 term at ASU.

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