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= P(1+r)^t](https://tex.z-dn.net/?f=A%3D%20P%281%2Br%29%5Et)
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:
![A=3000(1+0.12)^1](https://tex.z-dn.net/?f=A%3D3000%281%2B0.12%29%5E1)
=3000(1.12)
=$3360
Profit after 2 year is $3,360.
Now, P= $3,000 and r =12%=0.12 , t=3 years
![A=3000(1+0.12)^2](https://tex.z-dn.net/?f=A%3D3000%281%2B0.12%29%5E2)
=3000(1.12)²
=$3763.2
Similar the profit at 4 year is
![A=3000(1+0.12)^3](https://tex.z-dn.net/?f=A%3D3000%281%2B0.12%29%5E3)
=3000(1.12)³
=$4214.784
The profit at 5th year is
![A=3000(1+0.12)^4](https://tex.z-dn.net/?f=A%3D3000%281%2B0.12%29%5E4)
=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