Question

In the year 2000, a company made $4 million in profit. For each consecutive year after that, their profit increased by 15%. How much would the company's profit be in the year 2003, to the nearest tenth of a million dollars?

Answer 1

Year 2000

Profit = 4 million

This is a compound growth problem. The formula is:

`F=P(1+r)^t`

Where

P is the intial amount (in our case, P = 4 million)

F is the final amount (what we need to find, profit in 2003)

r is the rate of growth (here, it is 15% per year, that is 15/100 = 0.15)

t is the time in years (From 2000 to 2003, it is 3 years, thus, t = 3)

Substituting the values, we have:

`\begin{gathered} F=P(1+r)^t \\ F=4(1+0.15)^3 \\ F=4(1.15)^3 \\ F=6.0835 \end{gathered}`

With the same 15% growth, the profit of the company is expected to be $6.1 million in 2003.

Answer

6.1 million dollars