Suppose 053 is the 3unit growth factor What is the 1unit gro

Suppose 0.53 is the 3-unit growth factor. What is the 1-unit growth factor? What is the 4-unit growth factor? What is the 6-unit growth factor? What is the 1/2-unit growth factor? What is the 1/11-unit growth factor?

Solution

Given that: [1 - r]³ = 0.53

=> [1 - r] = 0.53^1/3 = 0.8093

so 1 unit growth factor will be : [1 - r] = 0.8093

4 unit growth factor => [1 - r]⁴ = 0.8093⁴ = 0.4290

6 unit growth factor => [1 - r]⁶ = 0.8093⁶ = 0.2810

1/2 unit growth factor => [1 - r]^1/2 = 0.8093^1/2 = 0.8996

1/11 unit growth factor => [1 - r]^1/11 = 0.8093^1/11 = 0.9810.