3 replies to this topic

[Legendary]

Salam
I need help solving these two problems, any help is much appreciated.

5) Suppose demand for condominiums in Surrey,BC was recently projected to increase at the average annual rate of 3.5%. Assuming this continues into the future, how many years will it take for demand to triple?

6) In 1991, Jacob gave his good friend Bella a $50 share in his new vegetarian restaurant. Now, after 20 years, Bella's share is worth $350. What is the annual compound rate of return on Bella's share?


Thank you

[Waiting for HIM]

I won't tell you the answer:

1. Pull up the spreadsheet (excel), and fill the cells with the 3.5% growth till you see the base figure goes triple.

Then follow the numbers to figure out the formula for it.

Also chart the results to see the growth.

hint: you can also use a famous management formula but I want you to figure it out yourself once you see the result in spreadsheet.

2. Same formula will solve this one too.

Rule of thumb in management sciences:  "There is no free lunch." Figure out yourself what is behind the formula and you will remember it forever.

[Legendary]

Waiting for HIM, on 16 November 2011 - 09:22 PM, said:

I won't tell you the answer:

1. Pull up the spreadsheet (excel), and fill the cells with the 3.5% growth till you see the base figure goes triple.

Then follow the numbers to figure out the formula for it.

Also chart the results to see the growth.

hint: you can also use a famous management formula but I want you to figure it out yourself once you see the result in spreadsheet.

2. Same formula will solve this one too.

Rule of thumb in management sciences:  "There is no free lunch." Figure out yourself what is behind the formula and you will remember it forever.

the first one i solved it by log( i asked my prof) and the second one i just solved it by using A=p( 1+r)^n.  How do you find the answer on excel? solver? what if analysis?....

Edited by greenolive, 17 November 2011 - 11:02 PM.

[Waiting for HIM]

Make three columns, column one I'll have base amount, column two will have rate of increase in this case 3.5% and third column is new amount every year. Pull the cells down till you see the principal getting tripled.

I did not mean to do it using excel solver. Better to see the results coming in front of without a formula and you back track the formula by looking at the results.

The formula you used in number 2 is famous compound interest variation.

I suppose you could solve the number 1 above with the compound interest formula too, the FV variation.