Suppose that a company’s annual sales were $1,200,000 in 1999. The annual growth rate of sales from 1999 to 2000 was 16 percent, from 2000 t

Question

Suppose that a company’s annual sales were $1,200,000 in 1999. The annual growth rate of sales from 1999 to 2000 was 16 percent, from 2000 to 2001 it was −5 percent, and from 2001 to 2002 it was 22 percent.

The geometric mean growth rate of sales over this three-year period is calculated as 10.37 percent. Use the geometric mean growth rate and determine the forecasted sales for 2004.

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Rose 1 week 2021-09-15T04:39:51+00:00 2 Answers 0

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    0
    2021-09-15T04:40:57+00:00

    Answer:

    The forecasted sales for 2004 is $1965281.

    Step-by-step explanation:

    The annual sales in 1999 were = $1,200,000

    Let geometric mean growth rate = r

    we have now p = $1,200,000,

    r = 10.37% or 0.1037

    t = 5:

    We have the formula Amt= p(1+r)^{t}

    Amt =1200000(1+0.1037)^{5}

    Solving this we get;

    1200000\times1.63777=1965324

    A = $1,965,324

    0
    2021-09-15T04:41:19+00:00

    Step-by-step explanation:

    A = P (1 + r)^t

    Given that P = $1,200,000, r = 0.1037, and t = 5:

    A = $1,200,000 (1 + 0.1037)^5

    A = $1,965,334.41

    Round as needed.

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