Suppose That a Company's Annual Sales Were $1,200,000 in 1999

question 32

Multiple Choice

Suppose that a company's annual sales were $1,200,000 in 1999. The annual growth rate of sales from 1999 to 2000 was 16 percent, from 2000 to 2001 it was −5 percent, and from 2001 to 2002 it was 22 percent. What is the geometric mean growth rate of sales over this three-year period?

• A) 7.68%
• B) 9.27%
• C) 10.37%
• D) 11.00%
• E) 14.33%

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Definitions:

Capital Stock

The total amount of shares that a company can issue as authorized by its corporate charter, representing ownership in the company.

Redeemed Stock

Shares that have been bought back or repaid by the issuing company.

Financial Leverage

Financial leverage is the use of borrowed funds to increase the potential return of an investment, magnifying both potential gains and potential losses.

Dividend Rate

The total expected dividend payments from an investment or security expressed on an annual basis.