• PC is the previous year cost ($) • IR is the inflation rate (%) ## How to Calculate Inflation Cost? The following example problems outline how to calculate Inflation Cost. Example Problem #1: 1. First, determine the previous year cost ($). The previous year cost ($) is given as 10,000. 2. Next, determine the inflation rate (%). The inflation rate (%) is provided as 5. 3. Finally, calculate the Inflation Cost using the equation above: IC = PC * IR/100 The values given above are inserted into the equation below: IC = 10,000 * 5/100 = 5,000.00 ($)

Example Problem #2:

The variables needed for this problem are provided below:

previous year cost ($) = 20,000 inflation rate (%) = 5 Entering these values and solving gives: IC = PC * IR/100 = 10,000.00 ($)