A building to be built in 2025 will require the following materials with current unit prices shown for end-of-year 2021. Their expected inflation rates per year for each of the next 3 years are also shown. What is the estimated total future cost of this project in actual dollars in the year 2025 based on inflated prices at the end of year 2024? Hint: The cumulative inflation over 3 years equals (1+f₁)*(1+f2)+(1*f3) a. $35,000 b. $36,000 c. $37,000 d. $38,000 e. $39,000 Material Amount Needed Prices at EOY 2016 Inflation Rates in Each Year 2022 2023 2024
A building to be built in 2025 will require the following materials with current unit prices shown for end-of-year 2021. Their expected inflation rates per year for each of the next 3 years are also shown. What is the estimated total future cost of this project in actual dollars in the year 2025 based on inflated prices at the end of year 2024? Hint: The cumulative inflation over 3 years equals (1+f₁)*(1+f2)+(1*f3) a. $35,000 b. $36,000 c. $37,000 d. $38,000 e. $39,000 Material Amount Needed Prices at EOY 2016 Inflation Rates in Each Year 2022 2023 2024
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:A building to be built in 2025 will require the following materials with current unit prices shown
for end-of-year 2021. Their expected inflation rates per year for each of the next 3 years are also shown.
What is the estimated total future cost of this project in actual dollars in the year 2025 based on inflated
prices at the end of year 2024? Hint: The cumulative inflation over 3 years equals (1+f₁)*(1+f₂)+(1*f3)
a. $35,000 b. $36,000 c. $37,000
d. $38,000 e. $39,000
Material
Mortar
Bricks
Steel
Amount Needed
15,000 pounds
20,000 bricks
2000 linear feet rebar
Prices at EOY 2016
$0.55 per pound
$0.88 per brick
$3 per linear foot
Inflation Rates in Each Year
2022
2023
2024
5.8%
3.3%
4.7%
5.1% 2.7%
3.4%
7.2%
4.1%
5.2%
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