Question

sales of personal computers costing less than $1000 were estimated to equal $450 million in 1986. One analyst estimates that sales will grow at the rate of 20 percent per year over the next 8 years. Predict annual sales for the year 1992

Answer 1

We are given the following information about the sales of personal computers.

Initial sales: P = $450 million

Growth rate: r = 20% = 0.20

Number of years: t = 1992 - 1986 = 6 years

The predicted annual sales for the year 1992 is given by

`A=P(1+r)^t`

Let us substitute the given values into the above formula

`\begin{gathered} A=P(1+r)^t \\ A=450(1+0.20)^6 \\ A=450(1.20)^6 \\ A=\$1343.6928\; \text{million} \end{gathered}`

Therefore, the predicted annual sales for the year 1992 are $1343.6928 million.