Answer to Question #273930 in Civil and Environmental Engineering for Alan Enrico V Tuib

Question #273930

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 $45,000 per year for 4 years. If you were asked to convert

the future amounts into constant-value amounts per today’s dollars, what would the respective amounts

be? Assume the current market interest rate of 10% per year and inflation rate of 5% per year are

expected to remain the same over the next 4-year period.

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