Dear John,
Please help me how we calculate this Q in detail.
Selling price is inflated at 3%
so sales figure Year 2 = Sales at Year 1 * 103% = 0.7 million * 103% = $721,000
Sales figure Year 3 = Sales at Year 2 * 103% = $721,000 * 103% = $742,630
I don't understand the answer at the Revision Kit, Please advise
Thank you so much!!!
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Question 150 BPP Revision Kit
5y ago#1The question asks for the sales revenue at time 2, not at time 3.
The sales units at time 2 are 1.6 million from the question.
What are you inflating the demand? It is the selling price that inflates, not the demand.
The selling price at time 2 will be $5 x 1.03^2
Therefore the sales will be 1.6M x $5 x 1.03^2
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