question archive The cost of a garbage pick up in Green Valley is $4
Subject:MathPrice:2.86 Bought6
The cost of a garbage pick up in Green Valley is $4.5m for year 1. Estimate the cost in year 3 in year 1 dollars and in nominal dollars. The population is increasing at 6%, the nominal cost per ton is increasing at 5% and the inflation rate is estimated at 4%.
let X=the estimation cost in 3 years
x=$3.64m
Step-by-step explanation
given this formula you can solve the problem
Rate of Inflation = (CPIx+1 - CPIx ) / CPIx
Real Interest Rate=Nominal Interest Rate- Inflation (expected or actual)
base on the problem
nominal rate is 5% and your inflation rate =4%
Real interest =(5%-6%)=1%
calculating estimation in 3years
I=((CPI(this year)-CP(last year)) / CP(last year)
substitute value and let x is the cost in 3 years
4%=((X-3.5)/3.5
x=3.64
therefore the answers estimated cost in 3years is $3.64m