please help - question about indexes.....
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Can someone please help? I’m getting rather stressed out over this question regarding indexes and no matter what I try I can’t figure out how they have got to the answers. Even the textbook isn’t helping!!!
Correct me if I wrong but from what I understand and what the textbook reads, indexes are done as follows: (2001 being base year)
2001 150 150/150x100 = 150
2002 200 200/150x100 = 133.3
2003 250 250/150x100 = 166.7
Is this wrong???
Anyway here’s the question I’m stuck on:
Information shown is the actual turnover for the company over the past 5 years, together with an industrial sector index relevant for the same period.
Annual Turnover Years X00 X4
Year £m
X0 11.90
X1 12.75
X2 13.50
X3 14.20
X4 16.19
Index relevant to chemical sector of industry X99 = 100
Year Index
X0 104.1
X1 105.7
X2 107.9
X3 109.9
X4 111.8
Calculate the indexed value of annual turnover in year X00 terms.
The answers for this are:
Year Actual Turnover £m Index Adjusted Turnover £m
X0 11.90 11.90
X1 12.75 12.56
X2 13.50 13.02
X3 14.20 13.45
X4 16.19 15.07
Any suggestion would be greatly appreciated.
Correct me if I wrong but from what I understand and what the textbook reads, indexes are done as follows: (2001 being base year)
2001 150 150/150x100 = 150
2002 200 200/150x100 = 133.3
2003 250 250/150x100 = 166.7
Is this wrong???
Anyway here’s the question I’m stuck on:
Information shown is the actual turnover for the company over the past 5 years, together with an industrial sector index relevant for the same period.
Annual Turnover Years X00 X4
Year £m
X0 11.90
X1 12.75
X2 13.50
X3 14.20
X4 16.19
Index relevant to chemical sector of industry X99 = 100
Year Index
X0 104.1
X1 105.7
X2 107.9
X3 109.9
X4 111.8
Calculate the indexed value of annual turnover in year X00 terms.
The answers for this are:
Year Actual Turnover £m Index Adjusted Turnover £m
X0 11.90 11.90
X1 12.75 12.56
X2 13.50 13.02
X3 14.20 13.45
X4 16.19 15.07
Any suggestion would be greatly appreciated.
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Comments
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Re:please help - question about indexes.....
The key to remembering how to calculate indexed valued is to remember the following phrase:
'Divide by what you've got and times by what you want'
So you always divide your value by the current index that it is valued at, and then multiple the answer by the index that you want to value it at.
So in your question, you wanted to calculate the value as per the X00 index (104.1)
So here goes:
X1 = 12.75/105.7 x 104.1 = 12.56
X2 = 13.50/107.9 x 104.1 = 13.02
Does this now make sense? This saying really helped me to pass ECR as it was easy to remember and simple to use.0 -
Re:please help - question about indexes.....
You are a life saver, thank you so much. No where in my text book does it say that!
Ur a gem. :thumbup:0