Fubuki co. Dec 2010 — OpenTuition Forums

IIzdihar7y ago

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=1659 Thanks

John MoffatTutor7y ago#1

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).