Question

Maxwell started a home theater business in 2013. The revenue of his company for that year was $250,000. The revenue grew by 18% in 2014 and by 28% in 2015 . Maxwell projected that the revenue growth for his company in the next 3 years will be at least 23/ year. How much does Maxwell expect his minimum revenue to be for 2018 ? (Round your answer to the nearest cent.) $

Answer 1

To calculate the minimum revenue for 2018, we need to calculate the revenue growth for each year since 2013. The revenue in 2014 is 18% higher than the revenue in 2013, and the revenue in 2015 is 28% higher than the revenue in 2014. Assuming a constant growth rate of 23% per year from the revenue in 2015, the minimum revenue for 2018 can be calculated.

Step-by-step explanation:

To find the minimum revenue that Maxwell expects for 2018, we first need to calculate the revenue growth for each year since 2013. The revenue in 2014 is 18% higher than the revenue in 2013, and the revenue in 2015 is 28% higher than the revenue in 2014. To calculate the revenue for 2018, we can assume a constant growth rate of 23% per year from the revenue in 2015. Here are the steps to calculate the minimum revenue for 2018:

1. Calculate the revenue for 2014: Revenue in 2014 = Revenue in 2013 + (18% of Revenue in 2013)
2. Calculate the revenue for 2015: Revenue in 2015 = Revenue in 2014 + (28% of Revenue in 2014)
3. Calculate the growth rate for 2018: Growth rate for 2018 = 23%
4. Calculate the minimum revenue for 2018: Minimum Revenue for 2018 = Revenue in 2015 + (Revenue in 2015 * Growth rate for 2018)

Using the given information, we can substitute the values to find the minimum revenue for 2018.

Revenue in 2014 = $250,000 + (18% of $250,000) = $295,000

Revenue in 2015 = $295,000 + (28% of $295,000) = $377,600

Minimum Revenue for 2018 = $377,600 + ($377,600 * 23%) ≈ $463,448.00