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What is Chain Based Index Numbers?
Five years ago a business borrowed $100,000 agreeing to repay the principal and all accumulated interest at 8% pa compounded quarterly, 8 years from the loan date. Two years after
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A chain based index is one whereas the index is calculated every year by using the previous year as the base year. This kind of index measures rate of change from year to year. This method is appropriate where weights are changing rapidly and items are constantly being brought into the index and unwanted items taken out. This can be a quantity or price index.
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