Given the following equation Ya1gPg If Y12 a5 and P50 what i

Given the following equation:

Y=[a(1+g)/P]+g

If Y=.12, a=5, and P=50, what is g?

Select one:

a. .0339

b. .0296

c. .0234

d. .0182

Solution

Y=[a(1+g)/P]+g

0.12=[5(1+g)/50]+g

0.12=0.1(1+g)+g

0.12=0.1+0.1g+g

(0.12-0.1)=g*(0.1+1)

g=(0.12-0.1)/(0.1+1)

which is equal to

=0.0182(Approx).