Given that g is the rate of return on an investment,C is the initial cost,and R is the addition to output,which of the following equations can be used to calculate g?

Question

Quizplus · Accepted Answer

The formula for present value is:
C = R/(1+g)^t
Where,
t = time period
Since it is given in the question that it is an initial cost, we can take t = 0.
Thus, the equation becomes:
C = R/(1+g)^0
C = R/1
C = R
Hence,
R/C = 1
R = C
Substituting the value of R in the original equation, we get:
C = C/(1+g)^t
1 = 1/(1+g)^t
(1+g)^t = 1
Taking log on both sides,
t.log(1+g) = 0
log(1+g) = 0
1+g = 10^0
1+g = 1
g = 0

Given That G Is the Rate of Return on an Investment,C