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As compared to its first year of operation, ABC Company grew 8% in the second year and an additional 2% per year for the next two years. If total growth for years 2-4 was $45,000 over the first year’s sales of $150,000, how much did ABC Company grow in year 2?

  • Math -

    growth factor in first year = 1+r
    growth factor in 2nd year = 1.08
    growth factor in 3rd and 4th year = 1.02

    so 150000(1+r)(1.08)(1.02)^2 = 150000+45000
    1+r = 195000/(150000(1.08)(1.02)^2)
    1+r = 1.15696
    r = .15696 = 15.696fi
    or appr 15.7 %

    so at end of first year sales were
    150000(1.15696) = 17354.44
    at the end of 2nd year sales were
    17354.44(1.08) = 18742.79

    growth in 2nd year would be that difference
    = $1,388.35

  • error in placing decimal - Math -

    that should be $13,883.52 in the last line as the answer

  • Math -

    circle the word that completes each sentence

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