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Question

Cost of a construction material in 8 consecutive periods has been reported as follows: $4.84, $4.99, $5.11, $5.38, $5.65, $6.10, $6.73, $7.01

1. Develop the cost index of this material for all 8 periods.

2. What is the percent change in index value from period 7 to 8?

3. What is the average periodic rate of increase during the 8 periods?

4. Using the average rate of increase calculated in Part 3, estimate the cost index for period 12.