Question

Your finance textbook sold 52,500 copies in its first year. The publishing company expects the sales to grow at a rate of 16 percent each year for the next three years and by 10 percent in the fourth year. Calculate the total number of copies that the publisher expects to sell in years 3 and 4.

Answer 1

Answer:

The sales figure in year 3 is 81,947

The sales figure in year 4 is 90,142

Explanation:

The number of copies the publisher expects to sell in 3rd and 4th can be determined by computing the growth rate and increased sales from year 1 to year 4.

Year        growth                   sales

1          52,500*(1+16%)      60,900

2         60900*(1+16%)       70,644

3         70644*(1+16%)        81,947

4        81,947*(1+10%)         90,142

The sales of finance books in year 3 and 4 are 81,947 and 90,142 respectively

Note that the growth rate is continuous that accounted for the need to apply the growth rate to the previous year sales in order to arrive at current year sales