Because of the 10% annual inflation in new car and repair costs, a 5000 loss in year 1 will be equivalent to a loss of 5000θ1.10=5500 in year 2; a loss of 5000θ(1.10)2 =6050 in year 3; and a loss of 5000θ(1.10)3 =6655 in year 4.
Because of the 10% annual inflation in new car and repair costs, a 5000 loss in year 1 will beequivalent to a loss of 5000θ1.10=5500 in year 2; a loss of 5000θ(1.10)2=6050 in year 3; and aloss of 5000θ(1.10)3=6655 in year 4.