Suppose natural gas experiences a 1.8% increase per year in real terms over the foresee-able future. The

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Suppose natural gas experiences a 1.8% increase per year in real terms over the foresee-able future. The cost of a 1,000 cubic feet of natural gas is now $7.50.

a. What will be the cost in real terms of 1,000 cubic feet of natural gas in 22 years?
b. If the general price inflation rate (e.g., the CPI) for the next 22 years is expected to average 3.2% per year, what will a 1,000 cubic feet of natural gas cost in actual dollars 22 years from now?

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Engineering Economy

ISBN: 978-0133439274

16th edition

Authors: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

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