Answered: If the cost of a renovation in 10 years…

If the cost of a renovation in 10 years is expected to be $100,000 in “then present” dollars, what is the present worth of this work if the interest rate is 7% and the rate of inflation is 2%?

Fundamentals Of Construction Estimating

4th Edition

ISBN:9781337399395

Author:Pratt, David J.

Publisher:Pratt, David J.

Chapter18: Life-cycle Costing

Section: Chapter Questions

Problem 12RQ

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Concept explainers

Pricing Construction Equipment

Pricing construction equipment means estimating the cost of operation of all the construction equipment used in a construction project. The pricing is done based on two factors – ownership cost and operating cost of the equipment. Thorough knowledge of the ownership and operating costs is necessary for proper project management and executing profitable construction.

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If the cost of a renovation in 10 years is expected to be $100,000 in “then present” dollars, what is the present worth of this work if the interest rate is 7% and the rate of inflation is 2%?

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