Consider an imaginary economy that has been growing at a rate of 3% per year. Government...

Consider an imaginary economy that has been growing at a rate of 3% per year. Government economists have proposed a number of policies to increase the growth rate but first need to convince the president that the policies will pay off. To do so, they want to present a comparison of the number of years it will take for the economy to double, depending on the growth rate.

Using the rule of 70, determine the number of years it will take the economy to double at each growth rate Growth Rate Years Required to Double Percent (Nearest whole number of years)

Using the rule of 70, determine the number of years it will take the economy to double at each growth rate.

Solutions

Expert Solution

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

Consider an imaginary economy that has been growing at a rate of 4% per year. Government...

Consider an imaginary economy that has been growing at a rate of 4% per year. Government economists have proposed a number of policies to increase the growth rate but first need to convince the President that the policies will pay off. To do so, they want to present a comparison of the number of years it will take for the economy to double, depending on the growth rate. According to the rule of 70, determine the number of years it...

5. Assume that the economy has been growing at 2 % per year. You are an...

5. Assume that the economy has been growing at 2 % per year. You are an economist working at a Central Bank and need to establish what are the long-run effects of increasing the growth of the money supply to 10 % per year. State and then explain the long-run effects of this change on each of the following (give numerical estimates when possible): a) The annual rate of inflation b) The real interest rate c) The nominal interest rate

The economy has been growing at an average rate of 2.5% during the last year. The...

The economy has been growing at an average rate of 2.5% during the last year. The chairman of the Federal Reserve has stated that due to the economic growth and improvement in the labor markets, as evidenced by a declining unemployment rate, that the Fed stands ready to increase interest rates. Meanwhile, the government is having to deal with a growing budget deficit and may need to borrow money from the public to fund its operations. This is easily...

A firm has been growing at 20% per year, and you expect this growth rate will...

A firm has been growing at 20% per year, and you expect this growth rate will continue for another 3 years. After that it will face more competition and slip into a constant growth rate of 5% forever. If the discount rate is 10% and last dividend paid was $3. (a) What will the next dividend be? (b) What is the expected price of the stock 3 years from now? (c) What should the stock price be today?

Lite Events has been growing at a rate of 20% per year, and you expect this...

Lite Events has been growing at a rate of 20% per year, and you expect this growth rate in earnings and dividends to continue for another 4 years. The last dividend paid was $2, and if the steady (i.e., constant) growth rate after 4 years is 5%, what should the stock price be today? Assume that the stock has a beta of 2.0, Treasury bills yield 3%, and the market risk premium is 6%. *work please

XYZ has been growing at a rate of 30% per year in recent years. This same...

XYZ has been growing at a rate of 30% per year in recent years. This same supernormal growth is expected to last for another two years (30% for Year 0 to Year 1 and Year 1 to Year 2), then at a constant rate of 10% thereafter. a. If D0 = RM1.80, rs = 12%, then what is XYZ’s stock worth today? What is the expected dividend yield and its capital gains yield at this time?

Type 1A: Brite Events has been growing at a rate of 20% per year, and you...

Type 1A: Brite Events has been growing at a rate of 20% per year, and you expect this growth rate in earnings and dividends to continue for another 4 years. The last dividend paid was $2, and if the steady (i.e., constant) growth rate after 4 years is 5%, what should the stock price be today? Assume that the stock has a beta of 2.0, Treasury bills yield 3%, and the market risk premium is 6%.

Taussig Technologies Corporation (TTC) has been growing at a rate of 14% per year in recent...

Taussig Technologies Corporation (TTC) has been growing at a rate of 14% per year in recent years. This same growth rate is expected to last for another 2 years, then decline to gn = 8%. If D0 = $2.70 and rs = 9%, what is TTC's stock worth today? Do not round intermediate calculations. Round your answer to the nearest cent. $ What is its expected dividend yield at this time, that is, during Year 1? Do not round intermediate...

University Dry Cleaners has been growing at a rate of 19% per year in recent years....

University Dry Cleaners has been growing at a rate of 19% per year in recent years. This same growth rate is expected to last for another 3 years,then decline to g(n)=7% a. If Do=$180 and r(s)=10%,what is Calle Ochoa stock worth today? Terminal value-? Value of stock today-?

Conroy Consulting Corporation (CCC) has been growing at a rate of 27% per year in recent...

Conroy Consulting Corporation (CCC) has been growing at a rate of 27% per year in recent years. This same nonconstant growth rate is expected to last for another 2 years (g0,1 = g1,2 = 27%). -Select-IIIIIIIVV -Select-IIIIIIIVVItem 4 If D0 = $1.10, rs = 13% and gL = 7%, then what is CCC's stock worth today? Do not round intermediate calculations. Round your answer to the nearest cent. $ What is its expected dividend yield for the first year? Do...

Subjects