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

question 82

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.
The geometric mean growth rate of sales over this three-year period is calculated as 10.37 percent.Use the geometric mean growth rate and determine the forecasted sales for 2004.

• A)1,780,678
• B)1,200,014
• C)1,965,337
• D)1,613,371
• E)1,422,197

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Definitions:

Equivalent Annual Annuity

Equivalent Annual Annuity is a calculation used to compare the annualized cash flows of projects or investments with different durations.

Unequal Lives

Unequal lives refer to the comparison of investments or projects that have different durations or lifespans, complicating the analysis of their profitability or worth.

Positive Cash Flows

A situation where the cash inflows in a given period are greater than the cash outflows, indicating financial health.

Common Time Period

The standard duration used for comparing financial performance or investment returns across different assets or projects.