Question

In a company's first year in operation, it made an annual profit of $140,000. The profit of the company increased at a constant 20% per year each year. How much total profit would the company make over the course of its first 14 years of operation, to the nearest whole number?

Answer 1

$8,287,429

Explanation:

The total profit will be the sum of a geometric series. The formula for that sum is ...

Sn = a1 × (r^n -1)/(r -1)

where a1 is the first term, r is the common ratio, and n is the number of terms.

__

Here, the series has first term $140,000, common ratio 1+0.20 = 1.2, and we want the total of 14 terms. The total profit is ...

S14 = ($140,000) × (1.2^14 -1)/(1.2 -1) ≈ $8,287,429

In the first 14 years of operation, the total profit would be $8,287,429.