Baumol model

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August 5, 2016 at 8:24 am #331563
jingdong
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Dear John, in chapter 6 example 2, the Baumol model calculation like that [2x150x1,500,000/(0.095-0.05)]^1/2; However, in practice question 5, the Baumol model calculation like that [2x25x1,500,000/0.12]^1/2, wold you please tell me why? i thought it should be like this [2x25x1,500,000/(0.12-0.05)]^1/2, because of deposit at 5% per annual.
many thanks
August 5, 2016 at 9:58 am #331577
John Moffat
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I think you must be using an old set of lecture notes, because the current set (for September/ December exams) does not contain practice questions.
It is more important that you use a Revision Kit because they have lots of questions for practice.
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