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13 April, 19:50

Last year Rocco Corporation's sales were $225 million. If sales grow at 6% per year, how large (in millions) will they be 5 years later? a. $271.74 b. $301.10 c. $286.05 d. $316.16 e. $331.96

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  1. 13 April, 19:54
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    b. $301.10

    Explanation:

    Current Sales = P = $225,000,000

    Growth rate = g = 6%

    Number of year = 5 years

    Using simple growth formula we will find the Sales value after 5 years.

    Future Sales = Current Sale (1 + growth rate) ^Number of years

    A = P (1 + g) ^n

    A = 225,000,000 x (1 + 0.06) ^5

    A = 225,000,000 x 1.33823

    A = 301,101,750 = 301.10175 Million

    So, the correct option is b. $301.10.
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