Contemporary Engineering Economics 6th Edition by Chan Park

Exercise 2

The annual fuel costs required to operate a small solid-waste treatment plant are projected to be $2.2 million without considering any future inflation. The best estimates indicate that the annual inflation-free interest rate ( i ) will be 6% and the general inflation rate
will be 5%. If the plant has a remaining useful life of five years, what is the present equivalent of its fuel costs Use actual-dollar analysis.