It is 20X5 and you are evaluating an offer of $23,500 each for five gas-powered generators. Through market research, you found the "Motors and Generators" index used by Government and Industry analysts for purchasing generators. Your customer informed you that the last unit price paid in 20X0 for the same gas-powered generators was $21,200. That purchase was also for five generators, with similar performance and contract terms. Given this information and assuming no other variables apply in this situation, use price indexing to determine if the proposed price of $23,500 appears reasonable.

 

YEAR	MOTORS/GENERATORS INDEX
20X0	100.0
20X1	103.3
20X2	106.0
20X3	110.8
20X4	113.0
20X5	111.9

Answer rating: 100% (QA)

First we need to calculate the price index for the year 20X5 compared to 20X0 Price index 20X5 Price ... View the full answer