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olasank [31]
3 years ago
10

n 1982 the inflation rate hit 16%. Suppose that the average cost of a textbook in 1982 was $25. What was the expected cost in th

e year 2017 if we project this rate of inflation on the cost? (Assume continuous compounding. Round your answer to the nearest cent.) If the average cost of a textbook in 2012 was $150, what is the actual inflation rate (rounded to the nearest tenth percent)?
Business
1 answer:
Elis [28]3 years ago
6 0

Answer:

Total number of years = 35

a. Expected cost in 2017 = $25 * e^(35*0.16)

Expected cost in 2017 = $25 * e^5.6

Expected cost in 2017 = $25 * 270.42

Expected cost in 2017 = $6,760.50

b. If the average cost of a textbook in 2012 was $150, then the actual inflation rate:

150 = 25 * e^(r*t)

150 = 25 * e^(r*30)

6 = e^(r*30)

Taking log base e on both side

30r = Ln6

30r = 1.7918

r = 1.7918/30

r = 0.05972667

r = 5.97%

So,  actual inflation rate is 5.97%

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In 2016, Teller Company sold 3,000 units at $600 each. Variable expenses were $420 per unit, and fixed expenses were $270,000. T
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1500

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The accounting firm of johnson and johnson has decided to design a nonstatistical sample to examine the accounts receivable bala
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The total projected misstatement of the firm is $92225 and it can be concluded that projected misstatement is more than the expected misstatement.

<h3>How to calculate the projected misstatement?</h3>

The total projected misstatement will be calculated thus:

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