ICAEW BIP · Chapter 8 · Question 7 of 10
A cost was £60,480 in year 4, when the relevant price index stood at 126. The index is forecast to be 138 in year 6. What is the forecast cost in year 6, assuming the cost moves in line with the index?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) £66,240
Explanation
Forecast cost = £60,480 x 138 / 126 = £66,240. The index rises by 12 points, which is a 9.52% increase from 126; the points change should not be treated as a percentage.
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