Answer to Question #329361 in Mechanical Engineering for Jhonny

Question

3. A machine costs P20,000 today. If inflation rate is 6% per year and interest is 10% per

year, what will be the appropriate future value of the machine, adjusted for inflation, in

five years? (Please show solution with correct answer)

Answer 1

i_f = 0.10 + 0.06 + (0.10)(0.06) = 0.166 or 16.6%

F = 20 000(F/P, i_f%, 5)