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What is Inflation in Engineering Economics about?

Lecture 5 discusses inflation and its impact on economic analyses. Inflation decreases the purchasing power of currency over time. There are two main ways to account for inflation: 1) convert cash flows to constant value dollars using the inflation rate and real interest rate, or 2) use the market interest rate, which includes inflation. Different interest rates must be used depending on whether the analysis considers constant dollars, future dollars, or real rates of return.

Author

Qed Vio

Language

EN