Answer: $8.2 million.
Explanation:
If we have a quantity A, and we have an increase of x%, this can be written as:
A + (x%/100%)*A
Now, for this particular case we have:
In year 2000 (we can define this year as the year zero, y = 0) the initial value is $4.7 million.
The next year, y = 1, there is an increase of 15%, then we will have a profit of:
P = $4.7 million + (15%/100%)*$4.7 million = $4.7 million + 0.15*$4.7 million
P = $4.7 million*(1 + 0.15) = $4.7 million*(1.15)
in the next year, y = 2, the profit will be:
P = $4.7 million*(1.15) + (15%/100%)* $4.7 million*(1.15)
= $4.7 million*(1.15) + 0.15* $4.7 million*(1.15)
= $4.7 million*(1.15)^2
We already can see the pattern, the profit in the year y will be:
P(y) = $4.7 million*(1.15)^y
In particular, in the year 2004 we have y = 4, then the profit that year will be:
P(4) = $4.7 million*(1.15)^4 = $8.2 million.
