Lecture+6 - Lecture 6 Studying Economic Growth Tools and...

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Lecture 6 Studying Economic Growth Tools and Facts Prof. Paczkowski Lecture 6 Studying Economic Growth Tools and Facts Prof. Paczkowski Rutgers University Spring, 2010 Prof. Paczkowski (Rutgers University) Spring, 2010 1 / 46
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Lecture 6 Studying Economic Growth Tools and Facts Prof. Paczkowski Reading Assignments Part I Reading Assignments Prof. Paczkowski (Rutgers University) Spring, 2010 2 / 46
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Lecture 6 Studying Economic Growth Tools and Facts Prof. Paczkowski Reading Assignments Reading Assignments Prof. Paczkowski (Rutgers University) Spring, 2010 3 / 46
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Lecture 6 Studying Economic Growth Tools and Facts Prof. Paczkowski Introduction Part II Introduction Prof. Paczkowski (Rutgers University) Spring, 2010 4 / 46
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Lecture 6 Studying Economic Growth Tools and Facts Prof. Paczkowski Introduction Introduction We have often mentioned growth rates Prof. Paczkowski (Rutgers University) Spring, 2010 5 / 46
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Lecture 6 Studying Economic Growth Tools and Facts Prof. Paczkowski Introduction Introduction We have often mentioned growth rates How are they calculated? Prof. Paczkowski (Rutgers University) Spring, 2010 5 / 46
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Lecture 6 Studying Economic Growth Tools and Facts Prof. Paczkowski Introduction Introduction We have often mentioned growth rates How are they calculated? How can we look at or analyze growth rates across countries and regions? Prof. Paczkowski (Rutgers University) Spring, 2010 5 / 46
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Lecture 6 Studying Economic Growth Tools and Facts Prof. Paczkowski CAGR Part III Introduction Prof. Paczkowski (Rutgers University) Spring, 2010 6 / 46
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Lecture 6 Studying Economic Growth Tools and Facts Prof. Paczkowski CAGR CAGR Problem Suppose your company expects the following revenue stream from a new product. What is the average growth rate for the revenue? Prof. Paczkowski (Rutgers University) Spring, 2010 7 / 46
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Lecture 6 Studying Economic Growth Tools and Facts Prof. Paczkowski CAGR CAGR Problem Suppose your company expects the following revenue stream from a new product. What is the average growth rate for the revenue? Period Cash Flow 0 $400 1 $500 2 $600 3 $675 4 $700 Prof. Paczkowski (Rutgers University) Spring, 2010 7 / 46
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0 1 2 3 5 $400 $500 $600 $675 $700 $400 $500 $600 $675 $700 Calculate period-over-period growth using simple return formula:
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0 1 2 3 4 $400 $500 $600 $675 $700 $400 $500 $600 $675 $700 25.00% 100 1 - $400 $500 25.00% Calculate period-over-period growth using simple return formula:
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0 1 2 3 4 $400 $500 $600 $675 $700 $400 $500 $600 $675 $700 20.00% 25.00% 12.50% 3.70% Calculate period-over-period growth using simple return formula:
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Lecture 6 Studying Economic Growth Tools and Facts Prof. Paczkowski CAGR CAGR (Continued) Averaging the growth rates using a simple STAT 101 arithmetic averaging (i.e., calculating ¯ X ) yields Prof. Paczkowski (Rutgers University) Spring, 2010 11 / 46
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Lecture 6 Studying Economic Growth Tools and Facts Prof. Paczkowski CAGR CAGR (Continued) Averaging the growth rates using a simple STAT 101 arithmetic averaging (i.e., calculating ¯ X ) yields Average = 1 4 (0 . 25 + 0 . 20 + 0 . 125 + 0 . 037) = 0 . 153 Prof. Paczkowski (Rutgers University) Spring, 2010 11 / 46
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Lecture 6 Studying Economic Growth Tools and Facts Prof.
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Lecture+6 - Lecture 6 Studying Economic Growth Tools and...

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