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1)In the question it is mentioned that the item can be sold for $5 per box, it isn’t mentioned current price anywhere, but for the first year we still take the general inflation of 3% for the sales price?
2)Not related to question but related to presentation of answers,
For the formulas do we have to explain what the terms in the formula mean In EOQ formula do we need to mention D- Annual Demand etc? and can we use short forms like NPV and IRR?1
You are correct in that the examiner did not state that the selling price was in current prices (but nor did he say that it would be $5 in the first year). He should have said one or the other (and usually he does).
If it happens again, then obviously make sure he does not say one or the other, but best is to assume it is given at current prices (but write down that you have assumed that).2
You don’t need to write down what each of the terms in the formulae mean. The one time it would make sense to write it down would be if (for some reason) you were unsure about whether the figure you are using is actually correct. Then at least the marker would see that you knew what you were trying to do and give you some marks (even if you did use the wrong figure).
Abbreviations such as NPV and IRR are fine.
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