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Many companies use oil products as a resource in their own business operations ( like airline firms and manufacturers of plastic products ). Mangers of

Many companies use oil products as a resource in their own business operations (like airline firms and manufacturers of plastic products). Mangers of these firms will keep a close watch on how rising oil prices will impact their costs. The interest rate in the PV/FV equations in chapter 4 can also be interpreted as a growth rate in sales, costs, profits, and so on.

  1. Using the 1949 oil price and the 1969 oil price, compute the annual growth rate in oil prices during the 20-year period.
  2. Compute the growth rate between 1969 and 1989 and between 1989 and 2017.
  3. Given the price of oil in 2017 and your computed growth rate between 1989 and 2017, compute the estimated future price of oil in 2020 and 2025. 1949 - $2.54 1969 - $3.09 1989 - $15.86 2017 - $50.88

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