Question

The manager of a company decides to discontinue a product when annual sales fall to 5% of their peak. From the time of its maximum, annual sales have decreased at a constant percentage rate of 11% per year. How far into the future should the manager discontinue the product

Answer 1

25.7 years

Step-by-step explanation:

Let say that peak of sales is given by 100

A = P(1+/100)^t

5 = 100(1 - 11/100)^t

5/100 = (0.89)^tt

0.05 = (0.89)^t

Taking log of both sides

Log 0.05 = t log (0.89)

t = Log 0.05/log(0.89)

t = 25.7 years