An offshore services company is considering the purchase of equipment that has a cost today of $96,000. Inflation is a concern. The manufacturer plans to raise the price exactly in accordance with the inflation rate that may be somewhere between 1% and 8% per year. Develop a graph of how much the equipment will cost 3 years from now in terms of both (a) CV, and (b) future dollars.
What will be an ideal response?
(a) In CV dollars, the cost will be the same as today, $96,000, for all inflation rates.
(b) Future dollars line grows at (1+f)³
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