Question

Longstreet Corporation's sales today are $10 million. If sales grow at a rate of 10% per year, how long will it take Longstreet's sales to hit $15 million?

a. 4.25 years
b. 5.14 years
c. 4.68 years
d. 3.83 years
e. 5.66 years

Answer 1

To calculate how long it will take for Longstreet Corporation's sales to hit $15 million, we can assume that sales grow at a rate of 10% per year. Using the formula for future value and solving for the number of years, we find that it will take approximately 4.68 years for Longstreet's sales to reach $15 million.

Step-by-step explanation:

To calculate how long it will take for Longstreet Corporation's sales to hit $15 million, we can assume that sales grow at a rate of 10% per year. We can use the formula: future value = present value * (1 + growth rate)^n, where n is the number of years. Plugging in the values, we have $15 million = $10 million * (1 + 0.10)^n.

To solve for n, we need to isolate it. Dividing both sides by $10 million, we get (1 + 0.10)^n = 1.5. Taking the natural logarithm of both sides (ln), we have n = ln(1.5) / ln(1.10). Calculating this gives us n ≈ 4.68 years. Therefore, the answer is option c: 4.68 years.