The State budget director has asked you to create a medical care cost inflation index to...
The State budget director has asked you to create a medical care cost inflation index to use in evaluating certain items in the state budget. You are use to 2013 as the base year (2013=100.00) for your index. If costs have risen at an average annual rate of 4.35 percent in recent years, and the budget director believes that this rate will continue, what is the value of your index in 2018? please explain
Homework Answers
Inflation rate averages 4.35℅ per annum in 5 years.
Value of index in 2018 = 100(1+0.0435)^5
= 123.726
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