The state budget director has asked you to create a ten-year medical care cost inflation index...

 

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The state budget director has asked you to create a ten-year medical care cost inflation index to use in evaluating certain items in the state budget. She has been asked to use a base year of 2013. (a) If costs have risen at an average compound annual rate of 3.35% for a long time: since 1990, in fact. What is the value of the inflation index in 2023? (b) In 2013, the state budget was $7,535 million. It is expected to top $13,485 million in 2023. What is the real average annual percentage increase from 2013-2023? [Hint: You can set parts of this problem up as a Future Value problem, where: FVIF = (1+i)"] The state budget director has asked you to create a ten-year medical care cost inflation index to use in evaluating certain items in the state budget. She has been asked to use a base year of 2013. (a) If costs have risen at an average compound annual rate of 3.35% for a long time: since 1990, in fact. What is the value of the inflation index in 2023? (b) In 2013, the state budget was $7,535 million. It is expected to top $13,485 million in 2023. What is the real average annual percentage increase from 2013-2023? [Hint: You can set parts of this problem up as a Future Value problem, where: FVIF = (1+i)"]

Answer rating: 100% (QA)

Solutions a Value of the inflation index in 2023 Formula Future Value Present Value 1 Intere... View the full answer