Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 32

A doctor is on contract to a medium sized oil company to provide medical services at remotely located, widely separated refineries. The doctor is considering the purchase of a private plane to reduce the total travel time between refineries. The doctor can buy a used Lear jet now or wait for a new very light jet (VLJ) that will be available 3 years from now. The cost of the VLJ will be $1.9 million, payable when the plane is delivered in 3 years. The doctor has asked you, his friend, to determine the present worth of the VLJ so that he can decide whether to buy the used Lear now or wait for the VLJ. If the MARR is 15% per year and the inflation rate is projected to be 3% per year, what is the present worth of the VLJ with inflation considered