What Rate of Nominal Growth Is Expected in Sales If

question 88

Multiple Choice

What rate of nominal growth is expected in sales if they are currently $1,000,000 and are expected to reach $1,600,000 in 5 years? Assume an inflation rate of 3.5%.

• A) 3.20%
• B) 9.86%
• C) 12.00%
• D) 26.49%

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Definitions:

Useful Life

The estimated duration of time that an asset is expected to remain functional and productive for its intended purpose, affecting depreciation calculations.

Straight-Line Basis

A method of calculating depreciation or amortization by evenly allocating the cost of an asset over its useful life.

Salvage Value

The estimated value remaining in an asset after it has served its purpose.

Depreciation Expense

The systematic allocation of the cost of a tangible asset over its useful life, reflecting its consumption, wear and tear, or obsolescence.