Question

Last year Rocco Corporation's sales were $225 million. If sales grow at 6% per year, how large (in millions) will they be 5 years later? a. $271.74 b. $301.10 c. $286.05 d. $316.16 e. $331.96

Answer 1

Answer:

b. $301.10

Explanation:

Current Sales = P = $225,000,000

Growth rate = g = 6%

Number of year = 5 years

Using simple growth formula we will find the Sales value after 5 years.

Future Sales = Current Sale ( 1 + growth rate )^Number of years

A = P ( 1 + g )^n

A = 225,000,000 x ( 1 + 0.06 )^5

A = 225,000,000 x 1.33823

A = 301,101,750 = 301.10175 Million

So, the correct option is b. $301.10.