The Chinese GDP per capita is $2,100. If the Chinese GDP annual growth rate is c
ID: 2821070 • Letter: T
Question
The Chinese GDP per capita is $2,100. If the Chinese GDP annual growth rate is constantly 5%, how many years can it be equal to the current S. Korea’s GDP per capita, $21,000? (Hint: as there is no free lunch, when you plug in the numbers for your calculator, you have to decide one is negative, and one is positive; for example, if you deposit the money now into your bank account, that will be cash out-flow, so NEGATIVE; then in the future, you will get your money back, cash inflow at that time, it will become POSITIVE, got it); thus, you will pick either negative number, and the other will be positive for the GDP problem.
Explanation / Answer
Current GDP = 2100
Future GDP = 21000
Rate = 5%
The formula to calculate the no. of years by using excel formula nper(rate,pmt,pv,fv)
rate = 5%
pmt = 0
PV = -2100
Fv = 210000
Nper = 47
No. of years = 47 years