Question

The annual profit for a medical supply store increased 11% per year.If the first year's profit was $150,000, what was the amount of profit in 8 years? Round your answer to the nearest cent.

Answer 1

The form of the growth function is

`P(x)=a(1+r)^x`

Where:

a is the initial value

r is the rate of growth in decimal

x is the time

Since the first profit was $150,000, then

a = 150,000

Since the profit increased 11% per year, then

r = 11/100 = 0.11

Since the time is 8 years, then

x = 8

Substitute them in the form above

`\begin{gathered} P(8)=150000(1+0.11)^8 \\ P(8)=345680.6655 \end{gathered}`

The amount of profit in 8 years is 345,680.67 to the nearest cent