Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 7

The strategic plan of a solar energy company that manufactures high efficiency solar cells includes an expansion of its physical plant in 4 years. The engineer in charge of planning estimates the expenditure required now to be $8 million, but in 4 years, the cost will be higher by an amount equal to the inflation rate. If the company sets aside $7,000,000 now into an account that earns interest at 7% per year, what will the inflation rate have to be in order for the company to have exactly the right amount of money for the expansion