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Using an actual MARR (MARRC) of 15% and an inflation rate of 8%, what is the...

Using an actual MARR (MARRC) of 15% and an inflation rate of 8%, what is the future value of $9,640 in year 19, having today’s purchasing power? Enter the answer without the dollar sign correct to 2 decimal places, in the box below.

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Answer #1

Real interest rate (R) should be calculated first.

R = (MARR – inflation rate) / (1 + inflation rate)

    = (0.15 – 0.08) / (1 + 0.08)

    = 0.07 / 1.08

    = 0.06481

Future value = Present value (1 + R) ^ year

                      = 9,640 (1 + 0.06481) ^ 19

                      = 9,640 × 1.06481 ^ 19

                      = 9,640 × 3.29738

                      = 31,786.7432

Answer: 31,786.74

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