Explore BrainMass
Share

Explore BrainMass

    Calculating Annual Growth Rate

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    The following table shows annual sales data for Landrover, Inc., over the ten-year 1998-2008 period:

    Year Sales
    ($ Millions)
    1998 $4.0
    1999 4.8
    2000 5.6
    2001 6.4
    2002 7.0
    2003 7.6
    2004 8.4
    2005 9.2
    2006 10.2
    2007 11.2
    2008 12.4

    A.Calculate the 1998-2008 growth rate in sales using the constant rate of change model with annual compounding.
    B.Calculate 5-year and 10-year sales forecasts.

    © BrainMass Inc. brainmass.com October 10, 2019, 2:06 am ad1c9bdddf
    https://brainmass.com/economics/estimation-and-forecasting/calculating-annual-growth-rate-363065

    Solution Preview

    A. Calculate the 1998-2008 growth rate in sales using the constant rate of change model with annual compounding.

    Initial sales in 1998=So=$4.0 million
    Sales in 2008=S=$12.4 million
    Number of periods=n=10 years (1998 to 2008)
    Constant growth ...

    Solution Summary

    The solution describes the steps to calculate growth rate for the given data. It also gives 5-year and 10-year forecasts based upon calculated growth rate.

    $2.19