Question

Heading 2 Title 3. Say that the average worker in Canada has productivity of $30 per hour while the average worker in the United Kingdom has productivity of $25 per hour (both measured in U.S. dollars). Over the next five years, say that worker productivity in Canada grows at 1% per year while worker productivity in the UK grows 3% per year. At that point, who will have the higher productivity level, and by how much? -Productivity level of C

Answer 1

Here we use simple equation of compound interest,

Future value F=P((1+i)^n)

i is the interest value.

n is the no of years.

P is the principal value.

For Canada:

i=1%=.01

n=5 years

P=$30

F=30((1+.01)^5)

=$31.53

Therefore productivity of Canada after 5 years is $31.53

UK:

i=3%=.03

P=$25

F=25((1+.03)^5)

=$28.98

Therefore productivity of UK after 5 years=$28.98

Therefore CANADA will have higher productivity with productivity of $31.53 per hour.

It beats UK by $2.55(31.53-28.98)

Thank you for the question.