***Correction for the "Determine the inflation rate per half year":
The question asked for the actual/current MARR per half-year, not the inflation rate.
A business invests $8,000 into an account that has 5% interest per-year. Annual inflation is 3.5 % over the next 5 years. Determine the inflation rate per half year?
I tried doing this:
MARR_R = (1+MARR_C)/(1+f) - 1
--> 6% = (1+MARR_C)/(1+3.5%) - 1
--> MARR_C = 9.71 %/yr = 9.71/2 %/6month = 4.86 %/6month.
But I got the answer wrong since none of the multiple choice answers were that value.
The question was multiple choice, and here were the answers:
(a) 9.71 %
(b) 5.67 %
(c) 8.26 %
(d) 4.74 %
Could somebody clarify how to do this properly? Thanks.
2 answers
Sorry, another part I forgot to write (mixed it up with a similar question right by this question):
The real MARR (MARR_R) is given to be 6%.
What I wrote for the answer choices and my attempt at a solution still apply though.
The real MARR (MARR_R) is given to be 6%.
What I wrote for the answer choices and my attempt at a solution still apply though.
1 answer