With both.1 market interest rate and inflation rate of 8% per year, how much mus

Question

With both.1 market interest rate and inflation rate of 8% per year, how much must you deposit annually over 8 years to accumulate an amount of money with the same purchasing power as $0.80 today? The school of engineering is evaluating two options. It can perform upgrades now for $275,000 or it can defer for 5 years when the cost is expected to increase to $375,000. Economist expects a real MARR of 10% per year with an average inflation rate of 4%. Using the FUTURE WORTH ANALYSIS and CASE 4, determine if the school of engineering should purchase now or later: When inflation is not considered When inflation is considered

Explanation / Answer

Ans-

Price supports benefit farmers, harm consumers, impose
costs on society, and contribute to problems in world agriculture.
rmers benefit because the prices they receive and the output
they produce both increase, expanding their gross incomes. Consumers
lose because the prices
they
pay
for
farm
products rise
and
quantities purchased decline.
Society as a whole bears
veral costs. Surpluses of farm products will have to be bought
and stored, leading to a greater burden on taxpayers. Domestic
economic efficiency is lessened as the artificially high prices of
m products lead to an overallocation of resources to agriculture.
The environment suffers: the greater use of pesticides and
tilizers contributes to water pollution; farm policies discourage
crop rotation; and price supports encourage farming of environmentally
sensitive
land.
The efficient use of world resources is
also distorted because of the import tariffs or quotas which such
programs often require. Finally, domestic overproduction leads to
supply increases in international markets, decreasing prices and
causing a declined in the gross incomes of foreign producers.

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