Hey buddy, welcome back after a long time!
Good to see you.
the real GDP in Northwest Island is 4 times that of Southeast Island. If real GDP in Southeast Island is growing at 10% a year, and real GDP in Northwest Island is growing at 3.5% a year, approximately how many years will it take for real GDP in the 2 islands to match? (use the rule of 70 and assume population growth is 0.)
please show your work (via calculator)
n = 4s
g(n) = 3.5%
g(s) = 10.00%
n (1+ g(n))^n = s (1+g(s))^n
4s (1+ 0.035)^n = s (1 + 0.1)^n
4 (1+ 0.035)^n = (1 + 0.1)^n
4 = (1.10/1.035)^n
4 = (1.063)^n
n has to be 22.76 to have (1.063)^n = 4.
Note: Use goal seek feature of excel to find the value of n.
thanks! i scored a flat 700 on my first attempt (my quant was lacking) and moved on to CFA Level 2 (which is where this question came from). dont know whether i want to attend MBA school in this economic environment.