Question

A new computer company earns a profit of $245000 in its first year. The company expects the profits to increase by 15% each year for each subsequent year. Using your series formula, find the profit earned in its seventh year.

Answer 1

$566,700 to the nearest dollar.

Explanation:

This is a geometric series with nth term = a1r^(n-1) where common ratio r

= 1.15 and first term a1 = 245000

So in its 7th year the profit will be 245000^ 1.15^(7-1)

= 566699.8876.