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Dear sir,
Can you tell me what it means,
unit sale will grow by 40% in each of the next two years before falling to an annual growth rate of 5% for the final year?This is because, I calculated unit sold like this:
Year 1 1300*1.4=1820
Year 2 1300*1.4^2=2548
Year 3 1300*1.4^3=3567
Year 4 1300*1.05^5=1659Thanks
The question specifically says that sales will be 1,300 in the first year – so they are 1,300 (and not 1,300 x 1.4).
It then says they will grow by 40% in each of the next 2 year.
So in year 2 they are 1,300 x 1.4 (so as to grow at 40%), and in year 3 they are 1,300 x 1.4^2 (so as to grow for 2 years at 40%).It then says that they will then grow at 5%.
So in year 4 they are 1,300 x 1.4^2 x 1.05. (What you have written is growing them at 5% a year for 5 years. They grow at 40% a year for 2 years and then at 5% for 1 year).
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