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.

Answer 1

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.

Answer 2

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