Question

An analyst notices that a CEO has consistently achieved 25% growth in profits from one year to the next. The CEO's company currently has annual profits of $870,000. If the trend continues, what will the annual profits be in 6 years?

Answer 1

The currennt annual profit of the company is $ 870,000.

The growth percentage is 25%.

The annual profit of the company in the 6 years can be determined,

`\begin{gathered} \text{Annual Profit=870000(1+}(25)/(100))^6 \\ =870000((5)/(4))^6 \\ =3318786.62 \end{gathered}`

Thus, the aanyal profits after 6 years will be $ 3318786.62