Question

in its year 7 annual report, oak company reported sales of $1,440 million. if you anticipate that sales will grow by 4% each year for the foreseeable future, what will year 11 forecasted sales be? select one: a. $1,382.4 million b. $1,497.6 million c. none of these are correct d. $1,684.6 million e. $1,619.8 million

Answer 1

The forecasted sales for Oak Company in year 11 with a 4% annual growth from year 7's $1,440 million would be approximately $1,684.6 million.

Step-by-step explanation:

To find the forecasted sales for year 11, we need to apply the compound growth formula for each year from year 7 to year 11. This involves growing the initial amount by 4% each year for 4 years. The formula for compound growth is Future Value = Present Value * (1 + growth rate)^number of periods.

Using the data from the Oak Company's year 7 annual report, we apply the formula in the following manner: Future Sales = $1,440 million * (1 + 0.04)^4. Calculating this gives us Future Sales = $1,440 million * 1.16986, which equals approximately $1,684.6 million. So the forecasted sales for year 11 would be $1,684.6 million.