Problem No.

15 on page 229

Year Inflation Rate Inflation Adjustment Term K + INFL +

1 2% 2.00% 1 4 2.00%
2 3% 5% 2 4 5%
3 4% 3% 3 4 3%
4 5% 3.5 4 4 3.5
5 6% 4 5 4 4
6 6% 4.3 6 4 4.3
7 6% 4.6 7 4 4.6
8 6% 4.75 8 4 4.75
9 6% 4.9 9 4 4.9
10 6% 5 10 4 5
11 6% 5.1 11 4 5.1
12 6% 5.2 12 4 5.2
13 6% 5.2 13 4 5.2
14 6% 5.3 14 4 5.3
15 6% 5.3 15 4 5.3
16 6% 5.4 16 4 5.4
17 6% 5.4 17 4 5.4
18 6% 5.4 18 4 5.4
19 6% 5.5 19 4 5.5
20 6% 5.5 20 4 5.5
DR + LR + MR + = K Years Market Rate
0.1 0 0 6.1 1 0%
0.2 0 0.2 9.4 2 0.20%
0.3 0.5 0.4 8.2 3 0.40%
0.4 0.5 0.6 9 4 0.60%
0.5 0.5 0.8 9.8 5 0.80%
1 1 1 11.3 10 1.80%
1 1 1.2 11.8 20 2%
1 1 1.4 12.15
1 1 1.6 12.5
1 1 1.8 12.8
1 1 2 13.1
1 1 2.2 13.4
1 1 2.4 13.6
1 1 2.6 13.9
1 1 2.8 14.1
1 1 3 14.4
1 1 3.2 14.6
1 1 3.4 14.8
1 1 3.6 15.1
1 1 2 13.5