Question

based on your knowledge on the flexible accelerator model of investment suppose you have information on initial capital stock in year 2009 to be 10000 and that desired capital stock 80000. if the factor by which firms plan to close the gab between desired capital stock and the actual capital stock is 0.15 how many years will take for the firm to meet the desired capital stock.

Answer 1

$80,000= 10,000*1.15^n$

$8=1.15^n$

$n=15$

$1.15^{15}=8.137$

The firm need 15 years