Question

Master of Science Master of Science Students Student Home Problem: estimate R&D costs for a NEW PROGRAM in $M FY 2016 Fiscal Inflation Year Rate % Raw Index Historical Helicopter Program R&D Costs 2002 0.83% 1.0000 SM FYT 2003 1.02% 1.0102 Chinook 512 2008 2004 2.02% 1.0306 Apache 452) 2005 2005 2.81% 1.0595 Cobra 756 2002 2006 3.10% 1.0924 Kiowa 245 2005 2007 2.70% 1.1218 2008 2.41% | 1.1488 2009 1.51%| 1.1662 2010 0.81% 1.1757 2011 1.99% 1.1990 2012 1.79% 1.2205 2013 1.49% 1.2386 2014 1.49% 1.2571 2015 1.2709 2016 1.20% 1.2862 1.10%

Answer 1

Calculation of estimated R&D cost ( cost/inflation rate base year* inflation rate current year)

Chinook= $512/1.1488*1.2862= $573 (round off)

Apache= $452/1.0595*1.2862= $549

Cobra= $756/1* 1.2862= $972

Klowa= $245/1.0595* 1.2862= $297