If Sales Revenue in Year 1 Equals $500,000, Year 2

question 92

Multiple Choice

If sales revenue in Year 1 equals $500,000, Year 2 equals $510,000, and Year 3 equals $540,000, the percentage to be assigned for Year 3 in a trend analysis, assuming that Year 1 is the base year, is:

• A) 100%.
• B) 159%.
• C) 125%.
• D) 108%.

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Definitions:

Diversification

The reduction of risk achieved by replacing a single risk with a large number of smaller, unrelated risks.

Present Value

Present Value is a financial concept that determines the current worth of a future sum of money or stream of cash flows, given a specific rate of return.

Current Interest Rates

The prevailing rates at which borrowers can obtain loans and lenders can provide them, often set by central banks or market forces.

Rule of 70

A method used to estimate the number of years required for a quantity to double, given its annual growth rate, by dividing 70 by that growth rate.