EXAMPLE 8-8\ The prospective maintenance expenses for a commercial heating, ventilating,\ and air-conditioning (HVAC) system are estimated to be

$12,200

per year in\ base-year dollars (assume that

b=0

). The total price escalation rate is estimated\ to be

7.6%

for the next three years

(e_(1,2,3)=7.6%)

, and for years four and five\ it is estimated to be

9.3%(e_(4,5)=9.3%)

. The general price inflation rate

(f)

for\ this five-year period is estimated to be

4.7%

per year. Develop the maintenance\ expense estimates for years one through five in actual dollars and in real dollars,\ using

e_(j)

and

e_(j)^(')

values, respectively.

EXAMPLE 8-8 The prospective maintenance expenses for a commercial heating, ventilating, and air-conditioning (HVAC) system are estimated to be $12,200 per year in base-year dollars (assume that b=0 ). The total price escalation rate is estimated to be 7.6% for the next three years (e1,2,3=7.6%), and for years four and five it is estimated to be 9.3%(e4,5=9.3%). The general price inflation rate (f) for this five-year period is estimated to be 4.7% per year. Develop the maintenance expense estimates for years one through five in actual dollars and in real dollars, using ej and ej values, respectively