Your department is budgeting miscellaneous expenses for the next 5 years. Your best guess at the annual inflationrate is 3.9 percent, and the combined MARR is 15 percent. Expenses currently run $14,500 per year. Assume thatexpenses are end-of-year payments.a. Determine the then-current dollar amounts for years 1, 2, 3, 4, and 5.b. Determine the constant dollar amount for years 1, 2, 3, 4, and 5.Year 2005 2006 2007 2008 2009Rate % 18.853% 15.995% 10.665% "16.220% "12.723%574 CHAPTER 12 / INFLATION EFFECTSc. Determine the PW of the then-current dollar amounts.d. Determine the PW of the constant dollar amounts.

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Your department is budgeting miscellaneous expenses for the next 5 years. Your best guess at the annual inflation
rate is 3.9 percent, and the combined MARR is 15 percent. Expenses currently run $14,500 per year. Assume that
expenses are end-of-year payments.
a. Determine the then-current dollar amounts for years 1, 2, 3, 4, and 5.
b. Determine the constant dollar amount for years 1, 2, 3, 4, and 5.
Year 2005 2006 2007 2008 2009
Rate % 18.853% 15.995% 10.665% "16.220% "12.723%
574 CHAPTER 12 / INFLATION EFFECTS
c. Determine the PW of the then-current dollar amounts.
d. Determine the PW of the constant dollar amounts.

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