- All of the below are examples of problems applicable to Engineering Economy solution techniques, EXCEPT:
Select one:
a.Choosing the capacity of a new production facility.
b.Deciding whether to purchase a machine lubricant in order to extend the life of a currently used machine.
c.Being sued by a customer for damages resulting from a defective design of the product sold.
d.Deciding whether a company truck should be purchased or leased.
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Your answer is correct.
The correct answer is: Being sued by a customer for damages resulting from a defective design of the product sold.
2. Engineering Economy, and this course, involves all of the below, EXCEPT:
Select one:
a.comparing and choosing between alternatives
b.preparing financial statements for engineering business units
c.discounting dollars received in the future into today’s value
d.comparing benefits versus costs
The correct answer is: preparing financial statements for engineering business units
3. Which of the below would typically decrease with a larger number of units produced?
Select one:
a.Variable Cost per Unit
b.Fixed Cost per Unit
c.Total Variable Cost
d.Total Fixed Cost
The correct answer is: Fixed Cost per Unit
4. Which of the below would typically increase with a larger number of units produced?
Select one:
a.Total Variable Cost
b.Fixed Cost per Unit
c.Total Fixed Cost
d.Variable Cost per Unit
The correct answer is: Total Variable Cost
5. Assume fixed cost equals $80,000, the selling price is $100, and the variable cost per unit is $60. What is the contribution to profit per unit?
Select one:
a.
$2,000
b.
$40
c.
$160
d.
$500
The correct answer is: $40
6.All of the below are correct statements regarding the process of finding the optimal quantity to be produced, EXCEPT:
a.Finding the optimal quantity involves taking a second derivative and setting it equal to zero.
b.Finding the optimal quantity involves taking the first derivative and setting it equal to zero.
c.Finding the optimal quantity involves writing down an expression for calculating profit.
d.Finding the optimal quantity involves finding the optimal point on the demand curve.
The correct answer is: Finding the optimal quantity involves taking a second derivative and setting it equal to zero.
7. Tri-State Gaming Enterprises is considering developing a new video game for gamers 12-14 years old, which is an age group that is currently missing among its customers. Before making a decision whether to enter this new market or not, the company conducts market research in order to better estimate potential demand from the new age group. This market research results in a net cash outflow of $15,000. The net cash outflow associated with this market research is an example of
a.
A forced decision since not entering the new market would result in a loss of $15,000.
b.
Cost that can be recovered and thus not representing an incremental cost.
c.
Non-cash expense.
d.
Sunk cost.
The correct answer is: Sunk cost.
8. All of the relationships below are correct, EXCEPT:
a.
Total Fixed Cost = Total Cost per Unit x Number of Units Produced
b.
Variable Cost per Unit = Total Variable Cost / Number of Units Produced
c.
Variable Cost per Unit = Total Cost per Unit – Fixed Cost per Unit
d.
Total Cost = Total Fixed Cost + Total Variable Cost
The correct answer is: Total Fixed Cost = Total Cost per Unit x Number of Units Produced
9.A company incurs total cost of $225,000 when producing 10 units, $230,000 when producing 11 units, and $235,000 when producing 12 units of output. What is its total fixed cost?
a.
$175,000
b.
$220,000
c.
$225,000
d.
$230,000
e.
$235,000
f.
$200,000
The correct answer is: $175,000
10. A company incurs total cost of $225,000 when producing 10 units, $230,000 when producing 11 units, and $235,000 when producing 12 units of output. What is the incremental cost of producing the 12th unit of output?
a.
$230,000
b.
$235,000
c.
$5,000
d.
$465,000
The correct answer is: $5,000
11. (NOTE: ENTER YOUR ANSWER WITHOUT THE $ AND COMMA, ROUNDED TO ZERO DECIMAL PLACES, for instance as 29536, not as $29,535.623) Tulisker Railroads needs to make a decision whether to purchase a premium service package for one of its trucks. The package is expected to reduce the truck’s operating costs by $77 per hour of use. Assuming the truck is used 6 hours per day, calculate the expected annual savings resulting from implementing the premium service package. Assume there are 360 working days in a year. DO NOT ROUND IN YOUR CALCULATION STEPS (USE CALCULATOR MEMORY FUNCTIONS)!
A) 166320
12. (NOTE: ENTER YOUR ANSWER WITHOUT THE $ AND COMMA, ROUNDED TO ZERO DECIMAL PLACES, for instance as 5359, not as $5,358.623) Perelandra Delivery Inc. operates a fleet of delivery trucks. Two different models of trucks are available for purchase. Model A requires an oil change every 2500 miles, while Model B requires an oil change every 20000 miles driven. Each oil change, including the associated maintenance, material, and labor, costs $402. Assuming each truck will be operated for 440000 miles before replaced, what is the overall savings per truck resulting from less frequent oil changes if Model B is used instead of Model A? DO NOT ROUND IN YOUR CALCULATION STEPS (USE CALCULATOR MEMORY FUNCTIONS)!
The correct answer is: $ 61908
13. (NOTE: ENTER YOUR ANSWER WITHOUT THE COMMA, ROUNDED TO ZERO DECIMAL PLACES, for instance as 5358, not as 5,358.623. Your answer will be accepted regardless of whether you round your final answer up or down, but to avoid a rounding error in your final answer do not round your intermediate calculations too much.) Trine Metal is considering expanding its current production facility to enable production of a new wire type. The expected annual fixed cost associated with the expansion is $833000. The production of 1 roll of the new wire type will require 3 hours of labor at the rate of $18 per hour, and $104 worth of material. If the selling price of 1 roll of the new wire type is $3140, what is the minimum number of rolls of the wire that the company needs to sell each year in order to make the expansion profitable?
The correct answer is: 279
14. (NOTE: ENTER YOUR ANSWER WITHOUT THE COMMA, ROUNDED TO ZERO DECIMAL PLACES, for instance as 5358, not as 5,358.623.) Trine Manufacturing Holdings has estimated the following relationships between its revenues, expenses, and the number of units sold: Revenues = 772X – 0.7, and Expenses = 28X + 3.4 + 21. the number of units sold is denoted as X in the above equations. Calculate the number of units sold that results in maximum profit.
The correct answer is: 91
15. All of the below are examples of problems applicable to Engineering Economy solution techniques, EXCEPT:
Choosing the capacity of a new production facility.
b. Deciding whether to purchase a machine lubricant in order to extend the life of a currently used machine.
c. Being sued by a customer for damages resulting from a defective design of the product sold.
d. Deciding whether a company truck should be purchased or leased.
The correct answer is: Being sued by a customer for damages resulting from a defective design of the product sold.
16. Engineering Economy, and this course, involves all of the below, EXCEPT:
a. comparing and choosing between alternatives
b. comparing benefits versus costs
c. discounting dollars received in the future into today’s value
d. preparing financial statements for engineering business units
The correct answer is: preparing financial statements for engineering business units
17. All of the below are correct statements regarding the process of finding the optimal quantity to be produced, EXCEPT:
a. Finding the optimal quantity involves taking the first derivative and setting it equal to zero.
b. Finding the optimal quantity involves taking a second derivative and setting it equal to zero.
c. Finding the optimal quantity involves finding the optimal point on the demand curve.
d. Finding the optimal quantity involves writing down an expression for calculating profit.
The correct answer is: Finding the optimal quantity involves taking a second derivative and setting it equal to zero.
18. A company incurs total cost of $225,000 when producing 10 units, $230,000 when producing 11 units, and $235,000 when producing 12 units of output. What is the incremental cost of producing the 12th unit of output?
a. $465,000
b. $5,000
c. $235,000
d. $230,000
The correct answer is: $5,000
19. A company incurs total cost of $225,000 when producing 10 units, $230,000 when producing 11 units, and $235,000 when producing 12 units of output. What is its total fixed cost?
a. $220,000
b. $200,000
c. $235,000
d. $230,000
e. $225,000
f. $175,000
The correct answer is: $175,000
20. Assume fixed cost equals $80,000, the selling price is $100, and the variable cost per unit is $60. What is the contribution to profit per unit?
a. $500
b. $2,000
c. $160
d. $40
The correct answer is: $40
21. Which of the below would typically decrease with a larger number of units produced?
a. Fixed Cost per Unit
b. Total Fixed Cost
c. Total Variable Cost
d. Variable Cost per Unit
The correct answer is: Fixed Cost per Unit
22. Which of the below would typically increase with a larger number of units produced?
a. Total Fixed Cost
b. Total Variable Cost
c. Variable Cost per Unit
d. Fixed Cost per Unit
The correct answer is: Total Variable Cost
23. Tri-State Gaming Enterprises is considering developing a new video game for gamers 12-14 years old, which is an age group that is currently missing among its customers. Before making a decision whether to enter this new market or not, the company conducts market research in order to better estimate potential demand from the new age group. This market research results in a net cash outflow of $15,000. The net cash outflow associated with this market research is an example of
a. Sunk cost.
b. A forced decision since not entering the new market would result in a loss of $15,000.
c. Non-cash expense.
d. Cost that can be recovered and thus not representing an incremental cost.
The correct answer is: Sunk cost.
24. All of the relationships below are correct, EXCEPT:
a. Variable Cost per Unit = Total Cost per Unit – Fixed Cost per Unit
b. Variable Cost per Unit = Total Variable Cost / Number of Units Produced
c. Total Fixed Cost = Total Cost per Unit x Number of Units Produced
d. Total Cost = Total Fixed Cost + Total Variable Cost
The correct answer is: Total Fixed Cost = Total Cost per Unit x Number of Units Produced
25. (NOTE: ENTER YOUR ANSWER WITHOUT THE $ AND COMMA, ROUNDED TO ZERO DECIMAL PLACES, for instance as 29535, not as $29,535.623) Tulisker Railroads needs to make a decision whether to purchase a premium service package for one of its trucks. The package is expected to reduce the truck’s operating costs by $153 per hour of use. Assuming the truck is used 9 hours per day, calculate the expected annual savings resulting from implementing the premium service package. Assume there are 360 working days in a year.
The correct answer is: $ 495720
26. (NOTE: ENTER YOUR ANSWER WITHOUT THE $ AND COMMA, ROUNDED TO ZERO DECIMAL PLACES, for instance as 5358, not as $5,358.623) Perelandra Delivery Inc. operates a fleet of delivery trucks. Two different models of trucks are available for purchase. Model A requires an oil change every 2500 miles, while Model B requires an oil change every 10000 miles driven. Each oil change, including the associated maintenance, material, and labor, costs $799. Assuming each truck will be operated for 440000 miles before replaced, what is the overall savings per truck resulting from less frequent oil changes if Model B is used instead of Model A?
The correct answer is: $ 105468
27. (NOTE: ENTER YOUR ANSWER WITHOUT THE COMMA, ROUNDED TO ZERO DECIMAL PLACES, for instance as 5358, not as 5,358.623.) Trine Manufacturing Holdings has estimated the following relationships between its revenues, expenses, and the number of units sold: Revenues = 735X – 0.6, and Expenses = 64X + 4.3 + 44. the number of units sold is denoted as X in the above equations. Calculate the number of units sold that results in maximum profit.
The correct answer is: 68
28. (NOTE: ENTER YOUR ANSWER WITHOUT THE COMMA, ROUNDED TO ZERO DECIMAL PLACES, for instance as 5358, not as 5,358.623. Your answer will be accepted regardless of whether you round your final answer up or down, but to avoid a rounding error in your final answer do not round your intermediate calculations too much.) Trine Metal is considering expanding its current production facility to enable production of a new wire type. The expected annual fixed cost associated with the expansion is $703000. The production of 1 roll of the new wire type will require 2 hours of labor at the rate of $28 per hour, and $227 worth of material. If the selling price of 1 roll of the new wire type is $5580, what is the minimum number of rolls of the wire that the company needs to sell each year in order to make the expansion profitable?
The correct answer is: 133
29. Mango Manufacturing has acquired a new machine for $125,000. The machine is expected to have zero salvage value at the end of its useful life, after producing 75,000 units of output. If 15,000 units are produced during the first year of the machine’s use, how much depreciation expense will be recorded for the first year of its operation?
a.
$15,000
b.
$50,000
c.
$20,000
d.
$25,000
e.
$100,000
The correct answer is: $25,000
30. Which of the following would be a result of changing from the straight-line to the accelerated (MACRS) method of depreciation?
a.
lower taxes in the later years of a project’s life.
b.
lower overall depreciation expense.
c.
lower taxable income in the early years of a project’s life.
d.
higher overall depreciation expense.
The correct answer is: lower taxable income in the early years of a project’s life.
31. Bansko Inc. has just purchased a new lift for $200,000. The lift’s useful life is 8 years, and the company expects the salvage value at the end of year 8 to be $40,000. Using straight-line depreciation, the annual depreciation expense will be _________, and the book value of the lift at the end of year 5 will be _________.
a.
$30,000; $50,000
b.
$20,000; $75,000
c.
$20,000; $100,000
d.
$30,000; $100,000
e.
$25,000; $50,000
f.
$25,000; $75,000
The correct answer is: $20,000; $100,000
32. Mountain Rescue Inc. reported the following for its most recent fiscal year: revenues of $2,500,000, operating expenses of $1,500,000, acquisition of 5 new snowmobiles $50,000, and depreciation expense of $100,000. Therefore, the company’s taxable income is
a.
$850,000.
b.
$1,000,000.
c.
$900,000.
d.
$950,000.
The correct answer is: $900,000.
33. When a $50,000 depreciation expense is incurred
a.it is equivalent to a $50,000 cash inflow.
b.there is no impact on cash flows and thus depreciation doesn’t need to be included in a cash flow based project analysis.
c.it is equivalent to a $50,000 cash outflow.
d.there is no direct impact on the cash flows, but depreciation does impact the amount of cash paid in taxes.
The correct answer is: there is no direct impact on the cash flows, but depreciation does impact the amount of cash paid in taxes.
34. Assume that you are presented with an analysis of a possible expansion project. In the analysis, projected net cash flows resulting from the expansion were discounted using the firm’s cost of capital. The net present value of the project was computed to be positive, and therefore the project was recommended to be accepted. In describing the assumptions made, the analyst revealed that the projected cash flows were based entirely on projected quantities sold and current input and product prices, ignoring future price increases likely to be caused by inflation. Which of the below is correct?
a.
The analyst must make sure that real cost of capital was used as a discount rate in the calculation. If not, then the future cash flow estimates must be adjusted using higher future prices as indicated by the estimated inflation rate.
b.
The analyst made a mistake and needs to recalculate projected cash flows assuming higher future prices due to inflation, but the analyst also must make sure that the discount rate used is adjusted for inflation by subtracting the estimated inflation rate from the firm’s cost of capital.
c.
The analyst was correct in ignoring the inflation rate in the analysis, because what matters is the project’s real cash flows, not cash flows artificially increased by inflation.
d.
The analyst made a mistake and needs to recalculate the project’s net present value, assuming higher prices in the future as implied by the estimated inflation rate.
The correct answer is: The analyst must make sure that real cost of capital was used as a discount rate in the calculation. If not, then the future cash flow estimates must be adjusted using higher future prices as indicated by the estimated inflation rate.
35. One U.S. dollar is trading for 0.90 euros. One pound is trading for 1.5 euros. How many pounds would you get for $100?
a.
60
b.
74
c.
135
d.
167
The correct answer is: 60
36. Assume you plan on exchanging dollars for yen and buy shares of common stock of a Japanese company directly on a Japanese stock exchange. Assume the stock does not pay dividends. If the price of the stock you bought is 8% higher next year, and dollar depreciates against yen by 10% over the same time period, then in terms of the dollar your rate of return is equal to approximately
a.
2%
b.
-2%
c.
18%
d.
10%
The correct answer is: 18%
37. Assume the price index in years 2016, 2017, and 2018 is equal to 120, 140, and 130 in the same respective order. Thus, the inflation rate in 2017 is equal to approximately
a.
-7%
b.
17%
c.
8%
d.
20%
The correct answer is: 17%
38. You come across a photograph taken in year 1983. The photo displays a gas station with a gasoline price sign stating $0.76 per gallon. We could say that this price is quoted in __________ dollars. All of the choices below would make the previous statement correct, EXCEPT:
a.
current dollars
b.
nominal dollars
c.
real dollars
d.
actual dollars
The correct answer is: real dollars
39. Thunder Ice Arena has purchased a new zamboni (ice resurfacer) for $59000. It will be depreciated over 7 years using the straight line depreciation method, with zero salvage value assumed at the end of year 7.
Assuming the ice arena decides to sell the zamboni after 2 years, and is able to sell it for $32000, what will be the after-tax cash amount collected from the sale? The tax rate is assumed to be 24%. DO NOT ROUND IN YOUR CALCULATION STEPS (USE CALCULATOR MEMORY FUNCTIONS)
The correct answer is: 34434
39. (NOTE: ENTER YOUR ANSWER WITHOUT THE $ AND COMMA, ROUNDED TO THE NEAREST DOLLAR, for instance as 10023, not as $10,022.78. Make sure if the answer is negative that you include the negative sign in front of your answer, for example -10023)
Big Cone Ice Cream Inc. purchased a new cutting edge slush making machine for $13000. The machine will be depreciated, using the straight-line method, over 7 years to a zero salvage value. The new machine will result in additional annual revenues of $53000, and an annual increase in expenses of $14000. If the tax rate is 16%, what will be the annual after-tax cash flow from the machine? DO NOT ROUND IN YOUR CALCULATION STEPS (USE CALCULATOR MEMORY FUNCTIONS)
The correct answer is: 33057
40. (NOTE: ENTER YOUR ANSWER WITHOUT THE $ AND COMMA, ROUNDED TO THE NEAREST DOLLAR, for instance as 10023, not as $10,022.78)
Pallavi receives $12000 from her uncle. She deposits the money in an account and leaves it there for 14 years. Assuming the account earns 9% interest rate, and the inflation rate is 3%, what is the balance in the account at the end of 14 years, expressed in real terms (in terms of today’s purchasing power)? Do not use any approximations in your calculations. DO NOT ROUND IN YOUR CALCULATION STEPS (USE CALCULATOR MEMORY FUNCTIONS)
The correct answer is: 26511
41. (NOTE: ENTER YOUR ANSWER IN PERCENT, BUT WITHOUT THE % SIGN, rounded to 2 decimal places, for instance as 7.89, not as 7.89%, or not as 0.0789)
Assuming market interest rate is 9.7% and real interest rate is 3.6%, what is the rate of inflation? Use the exact relationship between the rates, not an approximation. Your answer needs to be exact! DO NOT ROUND IN YOUR CALCULATION STEPS (USE CALCULATOR MEMORY FUNCTIONS)
The correct answer is: 5.89
42. Mango Manufacturing has acquired a new machine for $125,000. The machine is expected to have zero salvage value at the end of its useful life, after producing 75,000 units of output. If 15,000 units are produced during the first year of the machine’s use, how much depreciation expense will be recorded for the first year of its operation?
a. $20,000
b. $50,000
c. $25,000
d. $100,000
e. $15,000
The correct answer is: $25,000
43. Mountain Rescue Inc. reported the following for its most recent fiscal year: revenues of $2,500,000, operating expenses of $1,500,000, acquisition of 5 new snowmobiles $50,000, and depreciation expense of $100,000. Therefore, the company’s taxable income is
a. $900,000.
b. $1,000,000.
c. $850,000.
d. $950,000
The correct answer is: $900,000.
44. Bansko Inc. has just purchased a new lift for $200,000. The lift’s useful life is 8 years, and the company expects the salvage value at the end of year 8 to be $40,000. Using straight-line depreciation, the annual depreciation expense will be _________, and the book value of the lift at the end of year 5 will be _________.
a. $30,000; $100,000
b. $20,000; $75,000
c. $30,000; $50,000
d. $20,000; $100,000
e. $25,000; $75,000
f. $25,000; $50,000
The correct answer is: $20,000; $100,000
45. When a $50,000 depreciation expense is incurred
a. it is equivalent to a $50,000 cash inflow.
b. there is no impact on cash flows and thus depreciation doesn’t need to be included in a cash flow based project analysis.
c. it is equivalent to a $50,000 cash outflow.
d. there is no direct impact on the cash flows, but depreciation does impact the amount of cash paid in taxes.
The correct answer is: there is no direct impact on the cash flows, but depreciation does impact the amount of cash paid in taxes.
46. Which of the following would be a result of changing from the straight-line to the accelerated (MACRS) method of depreciation?
a. higher overall depreciation expense.
b. lower taxable income in the early years of a project’s life.
c. lower taxes in the later years of a project’s life.
d. lower overall depreciation expense.
The correct answer is: lower taxable income in the early years of a project’s life.
47. Assume the price index in years 2016, 2017, and 2018 is equal to 120, 140, and 130 in the same respective order. Thus, the inflation rate in 2017 is equal to approximately
a. 17%
b. 8%
c. -7%
d. 20%
The correct answer is: 17%
48. One U.S. dollar is trading for 0.90 euros. One pound is trading for 1.5 euros. How many pounds would you get for $100?
a. 60
b. 74
c. 167
d. 135
The correct answer is: 60
49. You come across a photograph taken in year 1983. The photo displays a gas station with a gasoline price sign stating $0.76 per gallon. We could say that this price is quoted in __________ dollars. All of the choices below would make the previous statement correct, EXCEPT:
a. nominal dollars
b. actual dollars
c. real dollars
d. current dollars
The correct answer is: real dollars
50. Assume that you are presented with an analysis of a possible expansion project. In the analysis, projected net cash flows resulting from the expansion were discounted using the firm’s cost of capital. The net present value of the project was computed to be positive, and therefore the project was recommended to be accepted. In describing the assumptions made, the analyst revealed that the projected cash flows were based entirely on projected quantities sold and current input and product prices, ignoring future price increases likely to be caused by inflation. Which of the below is correct?
a. The analyst made a mistake and needs to recalculate the project’s net present value, assuming higher prices in the future as implied by the estimated inflation rate.
b. The analyst made a mistake and needs to recalculate projected cash flows assuming higher future prices due to inflation, but the analyst also must make sure that the discount rate used is adjusted for inflation by subtracting the estimated inflation rate from the firm’s cost of capital.
c. The analyst must make sure that real cost of capital was used as a discount rate in the calculation. If not, then the future cash flow estimates must be adjusted using higher future prices as indicated by the estimated inflation rate.
d. The analyst was correct in ignoring the inflation rate in the analysis, because what matters is the project’s real cash flows, not cash flows artificially increased by inflation.
The correct answer is: The analyst must make sure that real cost of capital was used as a discount rate in the calculation. If not, then the future cash flow estimates must be adjusted using higher future prices as indicated by the estimated inflation rate.
51. Assume you plan on exchanging dollars for yen and buy shares of common stock of a Japanese company directly on a Japanese stock exchange. Assume the stock does not pay dividends. If the price of the stock you bought is 8% higher next year, and dollar depreciates against yen by 10% over the same time period, then in terms of the dollar your rate of return is equal to approximately
a. -2%
b. 10%
c. 2%
d. 18%
The correct answer is: 18%
52. (NOTE: ENTER YOUR ANSWER WITHOUT THE $ AND COMMA, ROUNDED TO THE NEAREST DOLLAR, for instance as 10023, not as $10,022.78)
Thunder Ice Arena has purchased a new zamboni (ice resurfacer) for $67000. It will be depreciated over 6 years using the straight line depreciation method, with zero salvage value assumed at the end of year 6.
Assuming the ice arena decides to sell the zamboni after 3 years, and is able to sell it for $39000, what will be the after-tax cash amount collected from the sale? The tax rate is assumed to be 28%. DO NOT ROUND IN YOUR CALCULATION STEPS (USE CALCULATOR MEMORY FUNCTIONS)
The correct answer is: 37460
53. (NOTE: ENTER YOUR ANSWER WITHOUT THE $ AND COMMA, ROUNDED TO THE NEAREST DOLLAR, for instance as 10023, not as $10,022.78. Make sure if the answer is negative that you include the negative sign in front of your answer, for example -10023)
Big Cone Ice Cream Inc. purchased a new cutting edge slush making machine for $11000. The machine will be depreciated, using the straight-line method, over 8 years to a zero salvage value. The new machine will result in additional annual revenues of $47000, and an annual increase in expenses of $28000. If the tax rate is 24%, what will be the annual after-tax cash flow from the machine? DO NOT ROUND IN YOUR CALCULATION STEPS (USE CALCULATOR MEMORY FUNCTIONS)
The correct answer is: 14770
54. (NOTE: ENTER YOUR ANSWER WITHOUT THE $ AND COMMA, ROUNDED TO THE NEAREST DOLLAR, for instance as 10023, not as $10,022.78)
Pallavi receives $17000 from her uncle. She deposits the money in an account and leaves it there for 13 years. Assuming the account earns 7% interest rate, and the inflation rate is 1%, what is the balance in the account at the end of 13 years, expressed in real terms (in terms of today’s purchasing power)? Do not use any approximations in your calculations. DO NOT ROUND IN YOUR CALCULATION STEPS (USE CALCULATOR MEMORY FUNCTIONS)
The correct answer is: 35996
55. (NOTE: ENTER YOUR ANSWER IN PERCENT, BUT WITHOUT THE % SIGN, rounded to 2 decimal places, for instance as 7.89, not as 7.89%, or not as 0.0789)
Assuming market interest rate is 7.3% and real interest rate is 3.9%, what is the rate of inflation? Use the exact relationship between the rates, not an approximation. Your answer needs to be exact! DO NOT ROUND IN YOUR CALCULATION STEPS (USE CALCULATOR MEMORY FUNCTIONS)
The correct answer is: 3.27
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