# 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 ...

###### Education

- BEng (Hons) , Birla Institute of Technology and Science, India
- MSc (Hons) , Birla Institute of Technology and Science, India

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