Original K = $45 billion Original L = 12.5 million d = 6% L growth = 2.5% K= value of kapital; L = Labor force; d = Depreciation %3D 1. What is the original K/L ratio? 45bil/12.5mil= 18:5 or 3.6 is the K/L ratio 2. After 1 year, given depreciation and the growth in the labor force, what is the new K/L ratio? 3.30 work=(45 bil–6/100×45 kil 12.5 Million+2.5/100×12.5 million, K/L Ratio=42.3 bil/12.81 mil=3.30K/L Ratio=42.3 million12.81 million=3.30) 3. How much gross investment is necessary to bring the K/L ratio back to its original level? Investment required = $2.699 billion. %3D a. what % of the original level of Kapital is this gross investment?
Original K = $45 billion Original L = 12.5 million d = 6% L growth = 2.5% K= value of kapital; L = Labor force; d = Depreciation %3D 1. What is the original K/L ratio? 45bil/12.5mil= 18:5 or 3.6 is the K/L ratio 2. After 1 year, given depreciation and the growth in the labor force, what is the new K/L ratio? 3.30 work=(45 bil–6/100×45 kil 12.5 Million+2.5/100×12.5 million, K/L Ratio=42.3 bil/12.81 mil=3.30K/L Ratio=42.3 million12.81 million=3.30) 3. How much gross investment is necessary to bring the K/L ratio back to its original level? Investment required = $2.699 billion. %3D a. what % of the original level of Kapital is this gross investment?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Answer section A please.
Transcribed Image Text:Original K = $45 billion
Original L = 12.5 million
d = 6%
L growth = 2.5%
K= value of kapital; L
Labor force; d = Depreciation
%3D
1. What is the original K/L ratio?
45bil/12.5mil= 18:5 or 3.6 is the K/L ratio
2. After 1 year, given depreciation and the growth in the labor force, what is the new K/L ratio?
3.30 work=(45 bil–6/100×45 kil 12.5 Million+2.5/100×12.5 million, K/L Ratio=42.3 bil/12.81
mil=3.30K/L Ratio=42.3 million12.81 million=3.30)
3. How much gross investment is necessary to bring the K/L ratio back to its original level?
Investment required = $2.699 billion.
a. what % of the original level of Kapital is this
gross
investment?
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