Question

Elegant designers have generated sales of $625,000 for the current year. If they can grow their sales at a rate of 12 percent every year, how long will it take for them to triple their sales?

Answer 1

To find out how long it will take for Elegant designers to triple their sales, we can use the formula for compound interest. It will take approximately 9 years for Elegant designers to triple their sales.

Step-by-step explanation:

To find out how long it will take for Elegant designers to triple their sales, we can use the formula for compound interest. The formula is given as: Final Value = Initial Value x (1 + Growth Rate)^Time. Rearranging the formula to solve for time, we have: Time = log(Final Value/Initial Value)/log(1 + Growth Rate).

In this case, the initial value of sales is $625,000 and the final value is 3 times the initial value ($1,875,000). The growth rate is given as 12% per year. Plugging in these values into the formula, we have: Time = log(1,875,000/625,000)/log(1 + 0.12).

Using a calculator, we can calculate that it will take approximately 9 years for Elegant designers to triple their sales.