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Calculating Annual Growth Rate

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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.

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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.

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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 provided by:
Lokesh Jain, MSc
Education
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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