Question

P12-26 (similar to) E Question Help prices is such that the cost of (Inflation and project cash flows) If the price of a gallon of regular gasoline is $2.39 and the anticipated rate of gasoline is expected to rise by 8 percent por yoar, what is the expected price per gallon in 9 years? The expected price per gallon of gas in 9 years is $ . (Round to two decimal places.)

Answer 1

Answer P12-26) Expected price per gallon in 9 years = 2. 39 * (1 + rate of rise in price)^9

= $2.39 * (1.08)^9

= $4.78

Ans P12-28) Per unit selling Price in year 1  = .98 * 1.01

= .9898

Per unit cost = .88 * 1.12

= .9856

since selling price is more than cost there will be a profit.

Profit = (.9898 - .9856) * 5.5 Million

= $23100