Question

Asked Nov 11, 2019

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(Inflation and project cash flows)

If the price of a gallon of regular gasoline is $2.49 and the anticipated rate of inflation in energy prices is such that the cost of gasoline is expected to rise by 5 percent per year, what is the expected price per gallon in 10 years?

The expected price per gallon of gas in 10 years is $

(Round to two decimal places.)

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Step 1

Future value can be defined as the worth of a present monetary value on a future specified date at a fixed interest rate.

Step 2

The expected price can be calculated with the help of below expression:

Step 3

Substitute $2.49 for present value, 5% for...

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