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Engineering Economics You may pay $ 15.000 for an annuity that pays $2500 per year for the next 10 year. You want a real rate
Engineering Economics You may pay $ 15.000 for an annuity that pays $2500 per year for the next 10 year. You want a real rate of return of 5%. and you estimate inflation will average 6% per year. Should you buy the annuity? Although inflation has been steady at a 2.5% average rate, economists now see trouble on the horizon due to the increases in crude oil prices over the next eight years. The leading economists in the oil industry expect oil prices to inflate: at first 3 years 4% annually, fourth year5%. fifth ycar6%. sixth 8%. seventh and eighth year 10%. You own a fuel oil company, and you need to revise your eight-year budget to include these expected increases in oil prices. Compute the geometric mean percentage inflation rate/for the eight-year period to two decimal places accuracy
Engineering Economics
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