Question

Suppose that a company's sales were $1,000,000 6 years ago and are $9,000,000 at the end of the 6 years. Find the geometric mean growth rate of sales. (Round your answer to 4 decimal places.)

Answer 1

Answer:

The geometric mean growth rate of sales is 1.4422.

Step-by-step explanation:

We have two sales values, one from 6 years ago and the other from now.

We have to calculate the geometric growth rate of sales.

We have:

$y(-6)=1,000,000\\\\y(0)=9,000,000$

We can write the relation between these two values as:

$y(0)=y(-6)k^{0-(-6)}\\\\9,000,000=1,000,000k^6\\\\k^6=9\\\\k=9^{1/6}= 1.4422$

The geometric mean growth rate of sales is 1.4422.