Answer:
$406.07
Explanation:
Revenue for year 1 = $100
Profit = 20%
Growth rate of revenue, = 15% per year = 0.15
Now,
year 1 is the base year thus, take it as n = 0
Revenue for the year = $100 × ( 1 + r )ⁿ
Profit = 20% of [$100 × ( 1 + r )ⁿ]
Year n Revenue Profit
1 0 $100( 1 + r )⁰ $20
2 1 $100( 1 + r )¹ $23
3 2 $100( 1 + r )² $26.45
4 3 $100( 1 + r )³ $30.4175
5 4 $100( 1 + r )⁴ $34.98
6 5 $100( 1 + r )⁵ $40.227
7 6 $100( 1 + r )⁶ $46.261
8 7 $100( 1 + r )⁷ $53.2004
9 8 $100( 1 + r )⁸ $61.1804
10 9 $100( 1 + r )⁹ $70.357
Hence,
Total profit for the year 1 - 10 = $406.07
