What happens over time to the real cost of purchasing a home, if the mortgage payments are fixed in nominal terms and inflation
is in existence? (A) The real cost is constant. (B) The real cost is increasing. (C) The real cost is decreasing. (D) The price index must be known to answer this question.
So, with existence of inflation, real rate cost will be decreasing after each period. After each period, it will be found out by dividing with inflation rate in the way shown above and added multiplicatively.
The answer and procedures of the exercise are attached in the following archives.
Explanation
You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.
Calculation to correctly denotes the number of square feet and employees over which the Building Maintenance cost and Human Resources cost would be allocated
Employees Human Resources 4,000
Machining 15,000
Assembly 21,000
Number of square feet 40,000
(4,000+15,000+21,000)
Therefore the number of square feet and employees over which the Building Maintenance cost and Human Resources cost would be allocated is 40,000