cumulative inflation factor for comparable data

cumulative inflation factor for comparable data

two hospitals report their annual projected revenue fo five years to the local newspaper for a story on the area’s future economic outlook. however, hospital 1
has applied a cumulative inflation factor of five percent per year while hospital 2 has not applied any inflation factor. thus the information is not properly
comparable.

Projected Revenue:

year 1 year 2 year 3 year 4 year 5

hospital 1 $20,000,000 $22,000,000 $27,000,000 $27,500,000 $30,000,000

hospital 2 $20,000,000 $21,000,000 $25,000,000 $24,000,000 $26,000,000

Revise hospital 2’s projection by applying a cumulative inflation factor of five percent per year.

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