Question

your business plan calls for sales of $45,000 in year 1 with compound growth of 30% per year thereafter. what are your projected sales for year 10? the formula for compound growth is e = b x (1 + r)t, where e is ending value, b is beginning value, r is rate of growth, and t is the amount of time.

Answer 1

To calculate the projected sales for year 10, the compound growth formula is used with a 30% growth rate from an initial sales figure of $45,000, resulting in approximately $620,446.50.

Step-by-step explanation:

The projected sales for year 10 can be calculated using the formula for compound growth: e = b x (1 + r)^t, where e is the ending value, b is the beginning value, r is the rate of growth, and t is the amount of time.

To apply this formula, we substitute the values: b as $45,000 which is the sales in year 1, r as 0.30 (30% expressed as a decimal), and t as 10 years for the tenth year projection. Therefore, the computation is e = $45,000 x (1 + 0.30)^10.

After calculating, we find the projected sales for year 10 to be e = $45,000 x (1.30)^10 = $45,000 x 13.7877 = $620,446.50 (approx.). Thus, the business plan estimates that the sales in year 10 will be approximately $620,446.50.