The Portland Stallions professional football team is looking at its future revenue stream from ticket sales. Currently, a season package costs $550 per seat. The season ticket holders have been promised this same rate for the next three years. Four years from now, the organization will raise season ticket prices based on the estimated inflation rate of 4.5%. What will the season tickets sell for in four years?

Answer:

FV = $550 X (1.045)⁴ = $550 X 1.1925186 = $655.89

My Question: the problem said: "The season ticket holders have been promised this same rate for the next three years". This means the increase will only happen in the last year. Why did we calculate it for the whole 4 years?

Thank you,