Question

Ashbury Corporation reports 2016 and 2017 total revenues of $90.0 million and $100.8 million respectively. If we expect prior growth to persist, we would forecast a revenue growth rate of:A. 15%B. 12%C. 24%D. 9%E. None of the above

Answer 1

Answer:

B. 12%

Explanation:

Revenue in 2016 = $ 90 million

Revenue in 2017 = $ 100.8 million

Growth during 2016-17 = 100.8 million - 90 million

                                      = $ 10.8 million

Same growth should persist for 2017 -18 which implies the gowth rate forecasted is same as growth rate during 2016-17.

Forecasted growth rate from 2017 to 18

= Growth rate during 2016-17

= (100.8 - 90)/90)

= 0.12

Therefore, we would forecast a revenue growth rate of 12%.