ACCOUNTING AND FINANCIAL ENGINEERING - EXAMPLE 34.17 : In the engineering calculations of interest rate caused by inflation, General Inflation Effect and Fisher Effect may be considered. Let I = inflation rate, R = nominal interest rate, r = real interest rate. According to Fisher Effect, (1 + R) = (1 + r) (1 + I). According to General Inflation Effect, r = R - I. (a) If I = 0.1 for all effects, both the values of R and r in the Fisher Effect are the same as R and r in the General Inflation Effect, find the values of R and r. (b) If R has the same value caused by both General Inflation Effect and Fisher Effect, find the possible values of R, r and I in term of R etc.
ACCOUNTING AND FINANCIAL ENGINEERING - ANSWER 34.17 : (a) For Fisher Effect, 1 + R = 1.1 (1 + r) = 1.1 + 1.1 r, 0.1 = R - 1.1 r (Equation 1). For General Inflation Effect, r = R - 0.1, 0.1 = R - r (Equation 2). Equation 2 - Equation 1 : r = 0, then R = 0.1. (b) (1 + R) = (1 + r) (1 + I) = 1 + I + r + rI, then R = (I + r) + rI (Equation 3). Let R = I + r (Equation 4). Equation 3 - Equation 4 : 0 = Ir, where (I = 0) or (r = 0) or (I = 0 and r = 0). If I = 0, r = R. If r = 0, I = R. If I = 0 and r = 0, R = 0 = 0 R = 1 R. The answer is given by Kang Chuen Tat; PO Box 6263, Dandenong, Victoria VIC 3175, Australia; SMS +61405421706; chuentat@hotmail.com; http://kangchuentat.wordpress.com.
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sir, kindly explain to me that how to calculate volume of torrispherical vessel which is used in pharma company ss reactor bottom dish volume. thank u.
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Question 44 - In a non-dilute absorber, graphical method is used to represent the process. In an X - Y coordinate system, X-axis represents mole of carbon dioxide / mole of water and Y axis represents mole of carbon dioxide / mole of nitrogen. The inlet gas stream consists of 8 mol % of carbon dioxide in nitrogen. (a) Find the S / G minimum as a slope that goes through the point (0, 0.0304) and (0.0000488, 0.086957). (b) Find the actual slope of operating line when it is 1.5 times the S / G minimum! (c) Find the value of x for inlet gas stream when y = 1640 x, y is mole fraction of carbon dioxide in nitrogen.
ACCOUNTING AND FINANCIAL ENGINEERING - EXAMPLE 34.9 : In the modelling of the total of n rolls of a dice by an engineering student, let D be the random outcome of rolling a dice once. (a) Find the probability of outcome of D = 1, 2, 3, 4, 5 and 6. (b) Find the average score of each rolling of a dice D. (c) Find the expected value, Sn of n rolls of a dice in term of n and D. A new dice has a value of D* = D - 3.5. (d) Find the values of D* for each volume of D = 1, 2, 3, 4, 5 and 6. (e) Find the equivalent model of Sn in term of n and D. (f) Find the expected value of D*.
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ACCOUNTING AND FINANCIAL ENGINEERING - EXAMPLE 34.2 : (a) In the pricing of a coupon bond, the formula is : P = c / (1 + r) + (c + B) / [ (1 + r) (1 + r) ] for 2 years to maturity, where c = annual coupon payment (in dollars, not a percent), B = par value, P = purchase price. Five years ago someone bought a 20 year coupon bond and would like to get rid of it now : A coupon rate of 7 %, it matures in exactly 2 years, par value is $1000, current interest rate is 5 %. (i) Find the value of c. (ii) Find the value of r or interest rate. (iii) Find the value of P. (iv) Guess the formula for P when the maturity period is 3 years, if such formula for 1 year duration is P = (c + B) / (1 + r). (b) In lemma of Ito on a Forward, recall that a forward contract is priced at : ln F = ln S + rT. Find the value of F in 5 decimal points when S = $100, r = interest rate = 0.05 / year, T = duration = 1 year.
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