## Solution

There are two equivalent ways of solving for rd0. The first is to take the real growth factor, 8.0/3.04, and set it equal to (1 + rd0)N.

The result is rd0 = 5.52%. The second method is to calculate the market rate rd by setting the market growth in current dollars equal to (1 + rd)N and calculating the inflation by setting the CPI increase equal to (1 + rin)N. One finds that rd = 12.246% and rinf = 6.371%. Then Eq. 8.7 can be solved for rd0, with the result r 0. 1 2246 - 0.06371 5

the same as before. COMMENTS

Choosing a discount rate is not without pitfalls. For the present example, the comparison with the real growth of other long term investments seems appropriate; of course, there is no guarantee that the endowment will continue growing at the same real rate in the future.

## Solar Stirling Engine Basics Explained

The solar Stirling engine is progressively becoming a viable alternative to solar panels for its higher efficiency. Stirling engines might be the best way to harvest the power provided by the sun. This is an easy-to-understand explanation of how Stirling engines work, the different types, and why they are more efficient than steam engines.

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