1. If the real interest rate is 5.80% per year and the expected inflation rate is 1.60%, what is the nominal interest rate according to the Fisher equation?
2. In 1990 the average tuition for one year at a 4-year institution was $3,500. Twenty years later, in 2010, it had risen to $21,200. What was the growth rate in tuition over this 20-year period?
3. Explain what a sunk cost is, what an opportunity cost is, and how each cost should be handled when doing project analysis. Give an example of each type of cost.