1. An economist has predicted that during the next 12 years, prices in the US will increase 55%. He expects a further increase of 25% in the subsequent 8 years. Compute the annual inflation rate ,f, for the entire 20 year period?
2. Compute the present value of $850 paid in three years using the following discount rates: 5 percent in the first year, 6 percent in the second year, and 7 percent in the third year.
3. If a manager can predict expenses, what advantages does this provide him with estimating project cost or setting budgets, as I am not quite sure myself?