Question

In the year 2003 a company made 8.8 million in profits. For each consecutive year after that their profits increased by 6%. How much would the company's profit be in the year 2007

Answer 1

Answer:

The company's profit in 2007 was 11.088 millions

Step-by-step explanation:

This is a compound interest problem where the initial amount is 8.8 million, the interest rate is 6% and the time period is 4 years and it gets compounded yearly. So we can use the compound interest formula, that is given by:

A = P*(1 + r/n)^(n*t)

Where A is the final amount, P is the initial amount, r is the rate, t is the total amount of time and n is the number of times it gets compounded in one year. We can now use all the values that were given to us to find out the profit of the company.

A = 8.8*(1 + (0.06))^(4) = 8.8*(1.06)^16

A  = 8.8*1.26 = 11.088 millions

So the company's profit in 2007 was 11.088 millions