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If GDP is currently $300 and the growth rate is 5 percent, how many years will...

If GDP is currently $300 and the growth rate is 5 percent, how many years will it take for GDP to reach 382.88? Round to the nearest whole number.

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Answer #1

Future value = 382.88 = FV

Present value = 300 = PV

Growth rate = 5% = 0.05 = r

n = Number of year

FV = PV (1+r)n

382.88 = 300 (1+0.05)n

1.05n = 1.276

Using logarithm

log (1.05n ) = log 1.276

n log 1.05 = log 1.276

n = log 1.276 / log 1.05

n = 4.99 =5 years

Answer: 5 years

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