Material prices are subject to a 3% monthly escalation. If current steel pricing is $2,800 per ton and the project will require steel procurement in 5 months, what should be the estimated cost per ton?
Correct Answer
A) $3,245
Using compound escalation: $2,800 × (1.03)^5 = $2,800 × 1.1593 = $3,246. Rounded to nearest dollar = $3,245.
Why This Is the Correct Answer
Using compound escalation: $2,800 × (1.03)^5 = $2,800 × 1.1593 = $3,246. Rounded to nearest dollar = $3,245.
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