Because testing of nuclear bombs was halted internationally in 1992, the Department of Energy has developed a laser system that allows engineers to simulate (in a laboratory) conditions in a thermonuclear reaction. Due to soaring cost overruns, a congressional committee undertook an investigation and discovered that the estimated development cost of the project increased at an average rate of 2% per month over a 5-year period. If the original cost was estimated to be $2.3 billion 5 years ago, what is the expected cost today?
What will be an ideal response?
F = 2.3(F/P,2%,60) (in $ billion)
= 2.3(3.2810)
= $7.546
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