Question

Pricing and Financial Management The Smith Hauling Company contracted with construction firms to haul debris away from construction sites. The company was in the process of buying a new truck in 2010. The last truck they purchased was in 2007, and they paid $160.000 for the new Peterbuilt truck. He asked the firm's accountant to see if there were statistics available that would help him decide on how much he should expect to pay for one this year. John, the accountant, knew of the Machinery and Equipment Subindex of the Producer Price Industrial Commodities from the Bureau of Labor Statistics. He got the following price index information from that organization:

Answer 1

2 first calculate the yearly increase rate / 5 6 7 put the average compunding increased rate=r7. now the price in 5 years from 2004 to 2009 will increae in % compounding yearly n=5 = 2009-2004 = (price in 2009/(price in 2004)/(1/5)-1 % =[[[111.3}}/96.37(1/5)-1 2.94% yearly increase 9 10 12 therefore the pride in 2010 will be = price in 2007 (1+r% 3 3 is the difference of 2010-2007 price in 2010 183,244.36 = 168000*(1+B1853