Question:
The Smith Hauling Company contracted with construction firms to haul debris away from construction sites.
The company was in the process of buying a new truck in 2010. The last ruck they purchased was in 2007, and they paid $160,000 for the new Peterbuilt truck. He asked the firm''s accountant to see if there was statistics available that would help him decide on how much he should expect to pay for one this yer.
John the accountant, knew of the machinery and Equipment Subindex of the producer price industrial commodities from the Bureau of Labor Statistics. He got he following price index information from that organization said:
Year Machinery and Equipment
2004 96.3
2005 100.5
2006 109.2
2007 106.0
2008 113.6
2009 111.3
Given the above index numbers, what could the Smith Company expect to pay for the new truck of the same type in 2010?
Explain on what basis the answer was arrived