GROWTH RATES Sawyer Corporation\'s 2015 sales were $7 million. Its 2010 sales we

Question

GROWTH RATES Sawyer Corporation's 2015 sales were $7 million. Its 2010 sales were $3.5 million a. At what rate have sales been growing? Round your answer to two decimal places. b. Suppose someone made this statement: Sales doubled in doubled in 5 years. This represents a growth of 100% in 5 years, so, dividing 100% by 5, we find the growth rate to be v-Select- The statement is correct because 100% divided by 5 equals 20%. is incorrect because there are 6 years of sales growth between 2005 and 2010. e a company's seles carinot double in such a short time span The statement is incorrect since the effect of Check My Work (3 remaining) 7 8 3

Explanation / Answer

Future sales = Current sales * ( 1+r)n

7 M = 3.5 M ( 1 + r)^5

( 1 + r)^5 = 7 /3.5

= 2

1+r = 2 1/5

= 1.1487

r = 1.1487 - 1

= 0.1487 i.e 14.587%

Part B: The statment is wrong as it is not considered the compounding of sales.

Pls comment, if any further assistance is required.

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