Hi I was wondering if someone could help me out with a few questions:
I'm not sure if I have done question 2a right and I don't know how to attempt 2b?
2 (a) What is the constant annual rate of interest needed for a savings account to grow by85% in 15 years (i.e. with interest paid annually)? (4 marks)
(b) What is the effective annual interest rate if the nominal rate is 7% and interest is paidevery week? (4 marks)
I don't know how to do question 3c? I've completed the other parts but I don't know what to do for this part
3. Given the short run total cost function TC = 3q3 - 53q2 + 250q +81(a) Show that average cost is at its minimum when q = 9. (5 marks)(b) Find the output at which marginal cost is at its minimum. (5 marks)(c) Show that MC = AC when AC is at its minimum. (3 marks)
for 5b and 5c I've done the working but I feel like I'm not really answering the question to get the full marks!
q5) The demand function for a good is q=90-p/3.(a) Find the inverse demand function, the total revenue function and the marginalrevenue functions. (5 marks)(b) Find the price and quantity at which total revenue is maximised, find the maximumtotal revenue and verify that this is a maximum. (5 marks)(c) Find the price elasticity of demand, and show that the marginal revenue is positivewhen demand is elastic, and negative when demand is inelastic. (5 marks)
Also, sorry last question but can someone please explain to me how to do question 6?
(a) Assume a nominal interest rate of 3.5% per annum, with discounting occurring sixtimes per year. Find the total present value of a series of 3 payments in which £2000is due in 5 years’ time, £2500 in 10 years’ time, and £3000 in 15 years’ time.(5 marks)(b) Firm X was worth four times as much as firm Y in 1998, but only 70% more in 2013.Assuming that the value of each firm experiences constant continuous growth, findthe difference in their average annual growth rates. If these relative growth ratescontinue to hold, when will firm B be worth more than firm A? (12 marks)
I've attached my workings for 2,3 and 5 to this post
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- Thread Starter
- 22-03-2016 17:15
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- 22-03-2016 18:39
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- 23-03-2016 13:10
I can only see what to do for question 2.
A 34% interest rate would get you to having 85% more in a few years, not as long as 15. (This has happened because you have set y=85 but that it doesn't quite make sense)
If you have a starting value of 'a' and you want a growth of 85%, then in terms of a, at the end of 15 years you will have ...
and for 2b, you must have seen a similar example to this before. If it says 7% per annum then every week it is .... so the EAR is ....Last edited by Kevin De Bruyne; 23-03-2016 at 13:13.