Question

Demand for electrical services in your area is $12 million per year. It is expected to grow 10% compounded annually over the next 5 years. What will demand be in 5 years? The formula for compound growth is E = B x (1 + R)T, where E is ending value, B is beginning value, R is rate of growth, and T is the amount of time.

Answer 1

In 5 years the demand will be about $19.33 million.

Given:

The formula for compound growth is $E = B \times (1 + R)^T$, where E is ending value, B is beginning value, R is rate of growth, and T is the amount of time.

Demand for electrical services (B) = $12 million per year

Growth rate (R) = 10%

T= 5 years

Computation:

Substitute all values in the formula , we get

$E = 12 \times (1 + 0.1)^5\\\\=12(1.1)^5\\\\=12\times1.61051=19.32612\approx19.33$

In 5 years the demand will be about $19.33 million.

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