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In-class practice problems going over the first lecture
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A medium-size consulting engineering firm is trying to decide whether it should remodel its office now or wait and do it one year from now. If the firm does it now, the cost will be $38,000. The interest rate is 10 % per year. a. What would the cost have to be one year from now to render the decision indifferent? b. If the cost one year from now is $41,600, should the firm remodel now or later? How many years does it take for an investment of $280,000 to accumulate to at least $425,000 at 15% per year interest? A sum of $2 million now is equivalent to $2. 36 million one year from now at what interest rate?