TABLE 8-4 Example 8-8 Calculations (1) End of (2) A$ Adjustment (e;) (3) (4) R$ Adjustment (e) (5) Maintenance Maintenance Year, k Expenses, A$ Expenses, R$ $12,200(1.076)! 12,200(1.076)2 12,200(1.076)³ 12,200(1.076)³ (1.093)! 12,200(1.076)³ (1.093)² $12,200(1.0277)! 12,200(1.0277)2 12,200(1.0277)3 12,200(1.0277)³ (1.0439)' 12,200(1.0277)³ (1.0439)² 1 S13,127 $12,538 2 14,125 12,885 3 15,198 13,242 16,612 18,157 4 13,823 5 14,430
TABLE 8-4 Example 8-8 Calculations (1) End of (2) A$ Adjustment (e;) (3) (4) R$ Adjustment (e) (5) Maintenance Maintenance Year, k Expenses, A$ Expenses, R$ $12,200(1.076)! 12,200(1.076)2 12,200(1.076)³ 12,200(1.076)³ (1.093)! 12,200(1.076)³ (1.093)² $12,200(1.0277)! 12,200(1.0277)2 12,200(1.0277)3 12,200(1.0277)³ (1.0439)' 12,200(1.0277)³ (1.0439)² 1 S13,127 $12,538 2 14,125 12,885 3 15,198 13,242 16,612 18,157 4 13,823 5 14,430
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
The prospective maintenance expenses for a commercial heating, ventilating, and air-conditioning (HVAC) system are estimated to be $12,200 per year in base-year dollars (assume that b = 0). The total price escalation rate is estimated to be 7.6% for the next three years (e1,2,3 = 7.6%), and for years four and five it is estimated to be 9.3% (e4,5 = 9.3%). The general price inflation rate ( f ) for this five-year period is estimated to be 4.7% per year. Develop the maintenance expense estimates for years one through five in actual dollars and in real dollars, using ej and ej values, respectively.
Transcribed Image Text:TABLE 8-4 Example 8-8 Calculations
(1)
End of
(2)
A$
Adjustment (e;)
(3)
(4)
R$
Adjustment (e)
(5)
Maintenance
Maintenance
Year, k
Expenses, A$
Expenses, R$
$12,200(1.076)!
12,200(1.076)2
12,200(1.076)³
12,200(1.076)³ (1.093)!
12,200(1.076)³ (1.093)²
$12,200(1.0277)!
12,200(1.0277)2
12,200(1.0277)3
12,200(1.0277)³ (1.0439)'
12,200(1.0277)³ (1.0439)²
1
S13,127
$12,538
2
14,125
12,885
3
15,198
13,242
16,612
18,157
4
13,823
5
14,430
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