11. 10.33 An engineer planning for her sons college education made deposits into a high-risk stock hedge

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11. 10.33 An engineer planning for her son’s college education made deposits into a high-risk stock hedge fund every time she earned extra money from side consulting jobs. The deposits and their timing are as follows: Table Summary: A table divided into 2 columns shows the number of years and deposits in dollars by an engineer. Year    Deposit, $ 0     5,000 3     8,000 4     9,000 7     15,000 11     16,000 17     20,000 1. The account increased at a market rate of 15% per year while inflation averaged 3% per year over the entire period. What was the purchasing power in terms of year 0 constant-value dollars immediately after the last deposit? 2. (Spreadsheet exercise) Calculate the purchasing power if the account actually earned less at 6% per year and inflation was higher than expected at 4% per year. Now, compare the purchasing power with the actual amount she deposited over the 17 years.

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Basics Of Engineering Economy

ISBN: 9781259683312

3rd Edition

Authors: Leland T. Blank, Anthony Tarquin

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