Chapter7 - MGNT 6005 Chptr 7 Homework Problems and Answers...

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MGNT 6005 Chptr 7 Homework Problems and Answers P7.1 Constant Growth Model . The U.S. Bureau of the Census publishes employment statistics and demand forecasts for various occupations. Employment (1,000) Occupation 1998 2008 Bill collectors 311 420 Computer engineers 299 622 Physicians assistants 66 98 Respiratory therapists 86 123 Systems analysts 617 1,194 A. Using a spreadsheet or hand-held calculator, calculate the ten-year growth rate forecast using the constant growth model with annual compounding, and the constant growth model with continuous compounding for each occupation. B. Compare your answers and discuss any differences. P7.1 SOLUTION A. Using the assumption of annual compounding, E t = E 0 (1 + g) t 420 = 311(1 + g) 10 1.35 = (1 + g) 10 ln(1.35) = 10 Η ln(1 + g) 0.300/10 = ln(1 + g) e 0.030 = 1 + g
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1.031 - 1 = g g = 0.031 or 3.1% Using the continuous compounding assumption, E t = E 0 e gt 420 = 311e 10g 1.35 = e 10g ln(1.35) = 10g g = 0.3000/10 = 0.03 or 3.00% Using the same methods, continuous growth model estimates for various occupations are: Employment (1,000) Continuous Growth Model Occupation 1998 2008 Annual Compounding Continuous
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Chapter7 - MGNT 6005 Chptr 7 Homework Problems and Answers...

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