Question

Your forecast shows $500,000 annually in sales for each of the next 3 years. If your second and third year predictions have failed to incorporate the 3% expected annual inflation, how far off in total dollar sales is your 3-year forecast

Answer 1

$45,450

Step-by-step explanation:

your first year sales should be $500,000

your second year sales should be $500,000 x 1.03 = $515,000

your third year sales should be $515,000 x 1.03 = $530,450

total sales = $1,545,450

since you previously budgeted $1,500,000 in sales for the 3 years, you were off by $45,450