Of course my firsts thoughts are rounding error, and what are the
chances of a multiple choice question where it makes a difference?
Then my thoughts say "very likely." Then I think, gee if it's essay, will
they even recognize what I'm doing? What do ya think? And then, what
if they preface it with an " as per the method shown in Feldblum's
article?" Will it just be wrong regardless of the answer? And
then,..EGADS! What if they say it must be performed with a pencil held
between your left toes at a 35 degree angle? <It could happen.>
Below is my logic that parallels the books example pages 27-28. See if
you can find a flaw that might lead to the slightly different answer. I'd like
to know even if I can't do it in the exam.
area ( earnings%) to current factor product
iv (.094) (.92)(1.15)(1.1) = 1.1638 .1094
v (.031) (1.15)(1.1) = 1.265 .0392
ix & vi (.156) (.92)(1.1) = 1.012 .1579
vii & viii (.719) (1.1) = 1.1 .7909
total 1.0974
For example, in order for region iv to be brought to current rates, we
must apply the 8% decrease in April, the 15% policy increase in July, and
the 10% increase in January of '93. Hence the (.92)(1.15)(1.1).
The book answer is 1.096 instead of 1.097. IF it was just this once, I
would ignore it, but I'm consistently off by a similar amount. Maybe, just
maybe, there's a reason that it has to be done the other way.