Question

An entrepreneur sells $15,000 worth of sports memorabilia during one year and sets a goal of increasing annual sales by $6000 each year for the next 9 years. Assuming that the entrepreneur meets this goal, find the total sales during the first 10 years of this business.

Answer 1

Forecasted sales: 25% maximum reduction. Recommendations: try new ways to increase sales during the months left, or reduce its own cost.

Step-by-step explanation:

If sales usually increase between March 1 and June 30, and this period accounts for 50% of annual revenue, if revenue is proportional to sales, a reduction in sales will reduce revenues.

Between March 1 and June 30 there are 4 months.

If sales usually pick up in March and this year they were low until the beggining of May, it means that only 2 of the 4 most productive months were higly productive.

If 50% of sales are concentrated in this 4 months, and this year 2 of the 4 months were not really productive, a maximum 25% of sales (and hence of revenues) may have lost.

Therefore, revenues may lower by 25% this year.

To avoid losses, it is advisable to try new ways to increase sales during the months left, that can consist on doing some advertisement and promotions (related to health care linked to exersice for example), that helps increasing sales in the months left, to compensate the looses of the 2 months. If sales cannot be increased, it is advisable to reduce cost to avoid further looses.

Answer 2

Total sales for first 10 years=$69,000

Step-by-step explanation:

First year=$15,000

He plans increasing annual sales by $6,000 each year for 9 years.

Second year sales= $15,000+$6,000

=$21,000

Third year sales=$21,000+$6,000

=$27,000

Fourth year sales=$27,000+$6,000

=$33,000

Fifth Year sales=$33,000+$6,000

=$39,000

Sixth year sales=$39,000+$6,000

=$45,000

Seventh year sales=$45,000+$6,000

=$51,000

Eighth year sales=$51,000+$6,000

=$57,000

Ninth year sales=$57,000+$6,000

=$63,000

Tenth year sales=$63,000+$6,000

=$69,000

Or

$6,000×9 years+$15,000

=$54,000+$15,000

=$69,000