Time now is February 2015. You have been asked to determine the amount that should be included in the Air Force's FY 2017 budget request for an aircraft production contract planned for award in that fiscal year. You have obtained the following information:
The cost estimate for the FY 2017 contract is $100 million (constant FY 2015 dollars).
The contractor estimates that the cost of the specific materiel in your system will increase by 5% between FY 2015 and FY 2017 due to inflation.
The escalation table for the Air Force Aircraft Procurement appropriation, Base Year FY 2015 shows that the FY 2017 raw (or compound) index is 1.0829 and the FY 2017 weighted (or composite) index is 1.1875.
The amount you should include in your budget for this production contract is:
A: $100.00 million
B: $108.29 million
C: $118.75 million
D. $105.00 million