Show ALL work to receive full credit. 6-(10 pints) President claims will make of
ID: 3116710 • Letter: S
Question
Show ALL work to receive full credit.
6-(10 pints) President claims will make of his country grow at 3.5% per year starting when he takes office. How much bigger will the economy will be after. (a) 6 months? (b) 12months (c) 24 months? (d) 36 months? (e) 48 months?
7-Compare these claims of growth against the rate at which economy grows on average currently: 1.5% per year. (redo (a)-(e) with a new growth rate.
Hint: (l+ rate) raised to the power of(number of periods)
please solve with full steps
Explanation / Answer
This is same as compounding interest formula
A = P (1+r)^n
where P is the intitial value
A is the value after n terms and growth of r in every term
r - interest rate (rate of change or growth)
n - no. of terms
(a)
Let's say the economy is 100 when president starts
(b)
months t A Grown since joining 6 months 0.5 101.73 1.73% 12 month 1 103.50 3.50% 24 months 2 107.12 7.12% 36 months 3 110.87 10.87% 48 months 4 114.75 14.75%