Answer:
Therefore the total of all profit earned by the end of of the the first 5 years is $19,058.542.
Step-by-step explanation:
To find total profit earned per year, we need to use the compound growth formula.
The compound growth formula:
A= Amount after t years
P= initial amount
r= rate of growth
t= time in year.
Given that,
New business made a profit during the first year of $3000.
If the profit increased 12% per year.
Here P= $3,000 and r =12%=0.12 , t=1 years
Plugging all value in the above formula:
=3000(1.12)
=$3360
Profit after 2 year is $3,360.
Now, P= $3,000 and r =12%=0.12 , t=3 years
=3000(1.12)²
=$3763.2
Similar the profit at 4 year is
=3000(1.12)³
=$4214.784
The profit at 5th year is
=3000(1.12)⁴
=$4720.558
Therefore the total of all profit earned by the end of of the the first 5 years is=$(3,000+3360+3763.2+4214.784+4720.558)
=$19,058.542