The inflation rate is 10%. A project will yield $1 000 in real dollars at the end of two years. How many actual dollars will it yield?
A)$900
B)$909
C)$1 100
D)$1 110
E)can't tell unless we know the MARR

Question

Quizplus · Accepted Answer

To find the actual dollars, we need to adjust the real dollars for inflation. The formula is: Actual Dollars = Real Dollars * (1 + Inflation Rate)^n. Here, $1,000 * (1 + 0.10)^2 = $1,000 * 1.21 = $1,210. However, since the choices do not include $1,210, the closest correct choice is $1,110, assuming a slight error in the options provided.

The Inflation Rate Is 10