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Assume that John's discount factor d%3D0.85. Find the value of the discount rate (the interest that corresponds to your discount factor) .Round to 3 digits after the decimal

Assume that John's discount factor d%3D0.85. Find the value of the discount rate (the interest that corresponds to your discount factor) .Round to 3 digits after the decimal

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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John is a talented artist who received an offer to go pro gymnast. He graduated from the business school of Talent University with a 4.0 GPA and scored 826 on his MCAT. Having all the needed skills, John is considering a career in any of the following tracks. John collected information related to potential income and cost for his options. Since he is considering average income, John divided his professional career into 5 periods of earning. | Occupation | Period 0 | Period 1 | Period 2 | Period 3 | Period 4 | |--------------|----------|----------|----------|----------|----------| | Neurosurgeon | -20 | 5 | 15 | 20 | 30 | | Accountant | 4 | | 6 | 10 | 12 | | Artist | 3 | 3 | 3 | 3 | 3 | | Gymnast | 25 | 10 | 0 | 0 | | Assume that John's discount factor \( d = 0.85 \). Find the value of the discount rate (the interest that corresponds to your discount factor). Round to 3 digits after the decimal.
Transcribed Image Text:John is a talented artist who received an offer to go pro gymnast. He graduated from the business school of Talent University with a 4.0 GPA and scored 826 on his MCAT. Having all the needed skills, John is considering a career in any of the following tracks. John collected information related to potential income and cost for his options. Since he is considering average income, John divided his professional career into 5 periods of earning. | Occupation | Period 0 | Period 1 | Period 2 | Period 3 | Period 4 | |--------------|----------|----------|----------|----------|----------| | Neurosurgeon | -20 | 5 | 15 | 20 | 30 | | Accountant | 4 | | 6 | 10 | 12 | | Artist | 3 | 3 | 3 | 3 | 3 | | Gymnast | 25 | 10 | 0 | 0 | | Assume that John's discount factor \( d = 0.85 \). Find the value of the discount rate (the interest that corresponds to your discount factor). Round to 3 digits after the decimal.
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