1. Using the constant dollar approach, the before-tax present worth is equal to $100 for an investment. Which of the following statements is correct regarding the then-current dollar approach for the investment?

a) The constant dollar approach and the then-current dollar approach present worths will vary based on the inflation rate.

b) The then-current dollar approach will have a before-tax present worth greater than $100 for the investment.

c) The then-current dollar approach will have a before-tax present worth less than $100 for the investment.

d) The then-current dollar approach will have a before-tax present worth equal to $100 for the investment.

2. Global steel prices have a year-over-year inflationary rate increase of 13.4%. Tube Fab purchased $700,000 of a particular carbon steel during the year just ended right now, and they intend to purchase the same quantity at the end of each of the next 5 years. Tube Fab earns a real rate of 16% on their money.Determine the then-current amounts they will pay for steel at the end of each of the next 5 years.

a) Determine the then-current amounts they will pay for steel at the end of each of the next 5 years.

b) Determine the constant value amounts they will pay for steel at the end of each of the next 5 years.

c) Determine Tube Fab’s PW of expenditures over the next 5 years using then-current dollars.

d) Determine Tube Fab’s PW of expenditures over the next 5 years using constant-value dollars.