A southwestern city has a contract with Firestone Vehicle Fleet Maintenance to provide maintenance services on its fleet of city-owned vehicles such as street sweepers, garbage trucks, backhoes, and carpool vehicles. The contract price is fixed at $75, 000 per year for 4 years What are the maintenance costs in each of the following 4 years in constant dollars with base year of today? Assume current market interest rate of 10% per year and inflation rate of 6% per year over the following 4-year period. Include both a CFD in actual dollars and a CFD in constant dollars.

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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A southwestern city has a contract with Firestone Vehicle Fleet Maintenance to provide maintenance services on its fleet of city-owned vehicles such as street sweepers, garbage trucks, backhoes, and carpool vehicles. The contract price is fixed at $75, 000 per year for 4 years What are the maintenance costs in each of the following 4 years in constant dollars with base year of today? Assume current market interest rate of 10% per year and inflation rate of 6% per year over the following 4-year period. Include both a CFD in actual dollars and a CFD in constant dollars.
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