Question

Transent Foods announced that its current sales is $1 million this year. The company forecasts a growth rate of 15 percent for the foreseeable future. How long will it take the firm to produce earnings of $3 million? (Round off to the nearest year.) Group of answer choices 7 years 6 years 8 years 10 years

Answer 1

Using the formula for exponential growth and inputting the provided data, it's estimated it will take about 8 years for Transent Foods to grow its earnings to $3 million at a 15% growth rate.

Step-by-step explanation:

This question involves understanding the concept of exponential growth. To find out the time it will take for Transent Foods' earnings to grow from $1 million to $3 million at a growth rate of 15 percent, we can use the formula for exponential growth: A=P(1+r)^n, where A is the final amount, P is the initial principal balance, r is the rate of interest, and n is the time in years.

Using this formula and filling it with the given information (A=3, P=1, r=0.15) and solving for n, we can find that it will take approximately 8 years for Transent Foods to see earnings of $3 million, assuming a consistent growth rate of 15%.

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