Question

Using an actual MARR (MARR_{C}) 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.

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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Solution calculated
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