Question

As compared to its first year of operation, ABC Company grew 8% in the second year and an additional 2% per year for the next two years. If total growth for years 2-4 was $45,000 over the first year’s sales of $150,000, how much did ABC Company grow in year 2?

Answer 1

growth factor in first year = 1+r
growth factor in 2nd year = 1.08
growth factor in 3rd and 4th year = 1.02

so 150000(1+r)(1.08)(1.02)^2 = 150000+45000
1+r = 195000/(150000(1.08)(1.02)^2)
1+r = 1.15696
r = .15696 = 15.696fi
or appr 15.7 %

so at end of first year sales were
150000(1.15696) = 17354.44
at the end of 2nd year sales were
17354.44(1.08) = 18742.79

growth in 2nd year would be that difference
= $1,388.35

Answer 2

that should be $13,883.52 in the last line as the answer

Answer 3

circle the word that completes each sentence