# Chapter 8 Key Problem

Submitted by: Submitted by

Views: 1074

Words: 603

Pages: 3

Date Submitted: 05/13/2010 11:37 PM

Report This Essay

Chapter 8

Key Question 2

Suppose an economy’s real GDP is \$30,000 in a year and \$31,200 in year 2. What is the growth rate of its real GDP? Assume that population is 100 in year 1 and 102 in year 2. What is the growth rate of GDP per capita?

The growth rate of its real GDP is [(\$31,200-30,000)/\$30,000]*100= 0.04 =4%

The growth rate of GDP per capita is (31,200/102-30000/100)/(31200/102)= 0.01923 = 1.92%

Key Question 11

If the CPI was 110 last year and is 121 this year, what is the year’s rate of inflation? What is the “rule of 70”? How long would it take for the price level to double if inflation persisted at (a) 2, (b) 5, and (c) 10 percent per year?

The year rate of inflation is (121-110)/110*100 = 0.1 = 10%

The “rule of 70”inflation would double the price level in years if given its annual percentage (70/annual percentage rate).

(a) If price level persisted at 2 it would take 35 years = 70/2.

(b) If price level persisted at 5 it would take 14 years = 70/5.

(c) If price level persisted at 10 it would take 7 years =70/7.

Chapter 3

E3.6. LO 3

ROI analysis using DuPont model.

Firm D

1. Firm D has net income of \$27,900, sales of \$930,000, and average total assets of \$465,000. Calculate the firm's margin, turnover, and ROI.

Margin \$27,900/\$930,000 = 0.03 = 3% (Net Income/Sales)

Turnover \$930,000/\$465,000= 2 (Sales/Total Assets)

ROI (\$27,900/\$930,000)*(\$930,000/\$465,000) = 0.06 (Net Income/Sale)*Sales/Total Assets)

2. Firm E has net income of \$75,000, sales of \$1,250,000, and ROI of 15%. Calculate the firm's turnover and average total assets.

Margin \$75,000/\$1,250,000= 0.06 = 6% (Net income/Sales)

Turnover 0.15/0.06 = 2.5 (ROI/Margin)

Average Total Assets \$1,250,000/2.5= \$500,000 (Sales/Turnover)

3. Firm F has ROI of 12.6%, average total assets of \$1,730,159, and turnover of 1.4. Calculate the firm's sales, margin, and net income.

Sales \$1,730,159*0.126= \$218,000 (Total/ROI)

Margin 0.126/1.4= 9% (ROI/Turnover)

Net Income...

### Related Essays

Chapter 13 Problems
Chapter 13 problems: 1. What is a monopoly and what is the chief distinction between ... arise due to a firm owning a key resource, government giving the firm
The Key Problems Facing The World's Cities In 21St Century
What are the key problems facing the worlds cities in 21st century and what can be done about them? Nowadays, when almost half the worlds
Towards Sustainable Tourism – Key Problems And Issues Facing Hong Kong
HTM 4105 Contemporary Tourism Issues Topic: TOWARDS SUSTAINABLE TOURISM KEY PROBLEMS AND ISSUES FACING HONG KONG Introduction Unquestionably, Hong Kong is a
Chapter Two Problems
Bus 225 Chapter 2 Problems 1) Income Statement for Rodham Hair Care Company Sales | 470000 | Cost of goods Sold | 140000 | Gross Profit | 330000 |