... + 125 ,000 -27 .000 S A M E H -25 0$00 -300,000 -550,000 50,000 90,000 150,000 4 Initial Investment, $ Life, Years PW at 12% per Year, $ -15,000 -25 ,000 - 10,000 -25 ,000 -40,000 12 8,540 12, 325 ... = $2. 14 August 20 03 A predicted price in 20 05 1s $2 23(1.04) = $2. 32 August 20 05 If inflation averages 4% per year over the next 10 years, Equation [14.3] is used to pred~ct Big Mac pnce In 20 14: ... McDonald's Big Mac in some parts of Texas $2. 23 August 20 04 $ i i i I If inflation averaged 4% dunng the last year, in constant-vnlrre2003 dollars, this cost is last year's equivalent of $2. 23/(1.04)...