Question

You estimate that your new business's revenue will grow at a compounded rate of 30% each month for the first 6 months. If your third month's revenue is estimated at $5,000, what is your second month's revenue? (Round to the nearest dollar.)

a) $2,945

b) $3,846

c) $4,012

d) $4,333

Answer 1

b

Explanation:

The formula for calculating future value:

FV = P (1 + r)^n

FV = Future value

P = Present value

R = interest rate

N = number of years

let a = second month's revenue

5000 = a(1.3)

a = 5000 / 1.3 = 3846