a) examine growth factor
yearly rate of loss = 42.1% = 0.421
yearly growth factor =
(1 - 0.421) =
(0.597)
To change to monthly growth factor, raise to power of 1/12.
(0.597)1/12 = (0.955)
Now, (0.955) = (1-.0445) which gives the monthly rate of loss as 4.45%.
OR |
b) examine growth factor
yearly growth factor = (0.597)
To change to 3 year growth factor, raise to power of 3.
(0.579)3
= 0.194
Now, (0.194) = (1-0.806) which gives a 3 year rate of loss to be 80.6%.
OR
|
a) using an equation
y = a(1 - r)x
y = a(1 - .421)x
y = a(0.579)x
y = a(0.579)x•12•1/12
y = a(0.5791/12)x•12
y = a(0.955)x•12
y = a(1 - .0445)x•12
Monthly rate of loss = 4.45% |
b) using an equation
y = a(0.579)x
y = a(0.579)x•3•1/3
y = a(0.5793)x•1/3
y = a(0.194)x•1/3
y = a(1 - 0.806)x•1/3
Rate of loss over 3 yrs. = 80.6% |