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Why the contribution from parts, in USA of $120 need to take into account the 3% inflation because the scenario mention that only the cost should be increased by inflation ?
The last sentence of the paragraph in which the components are mentioned says ‘all these costs, wherever incurred, are expected to increase by that countries inflation’. So it means all of the costs that are mentioned in that paragraph, which includes the component costs.
For the same question, Yilandwe, :
1) Why redundancy cost no need to take into account the inflation ? The question mentioned that all cost should increase by country inflation ?
2) Why we dont use discount factor of 9% ?
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