Question

Your business plan calls for sales of $65,000 in year 1 with compound growth of 35% per year thereafter. What are your projected sales for year 10?

Answer 1

The projected sales for year 10, based on a compound growth rate of 35% per year starting from an initial sales figure of $65,000 in year 1, would be approximately $1,711,036.25.

Step-by-step explanation:

The formula for calculating compound growth is given by the formula:

FV = PV *
`(1 + r)^n`

where:

- FV is the future value,

- PV is the present value,

- r is the growth rate per period, and

- n is the number of periods.

In this case, the initial sales (PV) is $65,000, the growth rate (r) is 35% or 0.35, and we are calculating for year 10 (n is 10). Plugging in these values into the formula:

FV = 65,000 * (1 + 0.35)^10

FV ≈ 65,000 * (3.042^10)

FV ≈ 65,000 * 69.639

FV ≈ 4,522,635

Therefore, the projected sales for year 10 would be approximately $4,522,635.

It's important to note that this calculation assumes a constant growth rate over the period, and market conditions, competition, and other factors may influence actual sales. Regularly revisiting and adjusting the business plan based on real-world performance is crucial for accurate forecasting and strategic decision-making.

Answer 2

The projected sales for year 10 for a sales of $65,000 in year 1 with compound growth of 35% per year thereafter will be $4,087,093.77.

Step-by-step explanation:

The projected sales for year 10, starting from an initial sales figure of $65,000 in year 1, are estimated using compound growth at a rate of 35% annually. Employing the compound interest formula A = P(1 + r)ⁿ, where A represents the final amount after n years, P is the initial amount, r stands for the annual growth rate, and n denotes the number of years, the calculation is as follows:

For year 10:

P = $65,000

r = 35% or 0.35

n = 9 (since we're projecting for year 10, which is 9 years after year 1)

Substituting these values into the formula gives us:

A = $65,000 × (1 + 0.35)⁹

A = $65,000 × (1.35)⁹

A = $65,000 × 27.8083676

A = $4,087,093.77

Therefore, the estimated sales figure is approximately $4,087,093.77. This exponential growth showcases how sales escalate significantly over time due to the compounding effect of the growth rate.