When a factory foreman beats elie who was he comforted by?
1 answer:
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Answer:
option (B) 35 years
Explanation:
Given:
Real per capita GDP of Sweden = $50,000
Real per capita GDP of Chile = $25,000
Growth rate of Sweden = 2%
Growth rate of Chile = 4%
As per the Rule of 70, the economy's GDP doubles in
Therefore,
The GDP of Sweden will double in = = 35 years
and,
Chile will double in = 17.5 years
Therefore,
in 35 years the GDP of Sweden will be $100,000
and,
In 35 years the GDP of Chile will also be ($50,000 in 17.5 years and $100,000 in next 17.5 years) = $100,000
Therefore,
The real GDP per capita in the two nations to converge in 35 years
Hence,
The correct answer is option (B) 35 years
Answer:
d. A perpetuity is a stream of regularly timed, equal cash flows that continues forever.
Explanation:
A perpetuity refers to a future stream of cash flows, paying a constant amount regularly till forever. Such stream is never ending.
The present value of a perpetuity is computed by dividing the constant amount receivable till forever, by required rate of return/cost of capital.
Present value of a growing perpetuity is given by
=
wherein cash flows represent cash flows receivable growing at g% rate till forever
r = required rate of return or cost of capital
g= growth rate of cash flows
Where the cash flows are of constant amount i.e non growing nature, the present value of such a perpetuity is given by,
=