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4.51. Brain Teaser. At a July 4 family reunion last summer, your Uncle Sidney learned that you took a course in engineering economy. Uncle Sidney
4.51. Brain Teaser. At a July 4 family reunion last summer, your Uncle Sidney learned that you took a course in engineering economy. Uncle Sidney has been working as a skilled machinist for Ford Motor Company since 1965. At the picnic he was curious about a couple of things, so he asked you these questions pertaining to the engineering economy course: a. Your uncle is thinking about "early" retire- ment at age 62 (he's now 54 years old), at which time he will be receiving a monthly Social Security check for $800. Alternatively, he can wait until age 65 to start receiving monthly Social Security checks for $1,000. If you conclude his personal MARR is about 1/2% per month (conservative), how old will your uncle be when both Social Security plans are equally desirable to him? What advice would you give him? b. Referring to part (a), what's the answer if uncle's MARR is 1.5% per month? (In your this case he's a fairly aggressive investor!) What can you generalize from your answer to parts (b) and (c)? C. Suppose your uncle's MARR is 0%, what should he do then
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