Question

In the year 2003, a company made $5.4 million in profit. For each consecutive year after that, their profit increased by 9%. How much would the company's profit be in the year 2006, to the nearest tenth of a million dollars?

Answer 1

Profit in 2006: $7 million

First convert the percent into decimal: 9% = 0.09

Then use the percent increase then multiply by the number using this formula: ( 1 + r ) = ( 1 + 0.09) = 1.09

You only want to find how much profit in 2006, so you do this:

2003: 5.4

2004: 5.4 (1.09) = 5.886

2005: 5.886 (1.09) = 6.41574

2006: 6.41574 (1.09) = 6.99316

Then you take 6.99316 and round to the nearest tenth of a million dollars.

7 million dollars.