Question

In: Finance

Growth Rates Sales for Hanebury Corporation's just-ended year were $20 million. Sales were $10 million 5...

Growth Rates

Sales for Hanebury Corporation's just-ended year were $20 million. Sales were $10 million 5 years earlier.

  1. At what rate did sales grow? Do not round intermediate calculations. Round your answer to two decimal places.

      %

  2. Suppose someone calculated the sales growth for Hanebury Corporation in part a as follows: "Sales doubled in 5 years. This represents a growth of 100% in 5 years; dividing 100% by 5 results in an estimated growth rate of 20% per year." Explain what is wrong with this calculation.

    choices-Select-The statement is incorrect since the effect of compounding is not considered.The statement is correct because 100% divided by 5 equals 20%.The statement is incorrect because there are 6 years of sales growth between initial and final years.The statement is incorrect because a company's sales cannot double in such a short time span.The statement is correct since the effect of discounting is considered.

Solutions

Expert Solution

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

jeff jeffy answered 10 months ago
Next > < Previous

Related Solutions

71. Last year Dania Corporation's sales were $525 million. If sales grow at 9.8% per year,...
71. Last year Dania Corporation's sales were $525 million. If sales grow at 9.8% per year, how large (in millions) will they be 8 years later?             a.         $1,142.39             b.         $1,109.12             c.         $1,364.22             d.         $1,131.30             e.         $842.93 72. How much would $1, growing at 13.7% per year, be worth after 75 years?             a.         $18,248.03             b.         $15,206.70             c.         $15,358.76             d.         $13,533.96             e.        ...
Sawyer Corporation's 2017 sales were $9 million. Its 2012 sales were $4.5 million. At what rate...
Sawyer Corporation's 2017 sales were $9 million. Its 2012 sales were $4.5 million. At what rate have sales been growing? Round your answer to two decimal places. Suppose someone made this statement: "Sales doubled in 5 years. This represents a growth of 100% in 5 years, so, dividing 100% by 5, we find the growth rate to be 20% per year." Is the statement correct?
Shalit Corporation's 2011 sales were $8 million. Its 2006 sales were $4 million. At what rate...
Shalit Corporation's 2011 sales were $8 million. Its 2006 sales were $4 million. At what rate have sales been growing? Round your answer to two decimal places
Sawyer Corporation's 2018 sales were $7 million. Its 2013 sales were $3.5 million. At what rate...
Sawyer Corporation's 2018 sales were $7 million. Its 2013 sales were $3.5 million. At what rate have sales been growing? Round your answer to two decimal places. % Suppose someone made this statement: "Sales doubled in 5 years. This represents a growth of 100% in 5 years; so dividing 100% by 5, we find the growth rate to be 20% per year." Is the statement correct?
Carlsbad Corporation's sales are expected to increase from $5 million in 2016 to $6 million in...
Carlsbad Corporation's sales are expected to increase from $5 million in 2016 to $6 million in 2017, or by 20%. Its assets totaled $2 million at the end of 2016. Carlsbad is at full capacity, so its assets must grow in proportion to projected sales. At the end of 2016, current liabilities are $1 million, consisting of $250,000 of accounts payable, $500,000 of notes payable, and $250,000 of accrued liabilities. Its profit margin is forecasted to be 5%, and the...
Carlsbad Corporation's sales are expected to increase from $5 million in 2019 to $6 million in...
Carlsbad Corporation's sales are expected to increase from $5 million in 2019 to $6 million in 2020, or by 20%. Its assets totaled $2 million at the end of 2019. Carlsbad is at full capacity, so its assets must grow in proportion to projected sales. At the end of 2019, current liabilities are $1 million, consisting of $250,000 of accounts payable, $500,000 of notes payable, and $250,000 of accrued liabilities. Its profit margin is forecasted to be 3%. Assume that...
Carlsbad Corporation's sales are expected to increase from $5 million in 2019 to $6 million in...
Carlsbad Corporation's sales are expected to increase from $5 million in 2019 to $6 million in 2020, or by 20%. Its assets totaled $4 million at the end of 2019. Carlsbad is at full capacity, so its assets must grow in proportion to projected sales. At the end of 2019, current liabilities are $1 million, consisting of $250,000 of accounts payable, $500,000 of notes payable, and $250,000 of accrued liabilities. Its profit margin is forecasted to be 3%. Assume that...
Carlsbad Corporation's sales are expected to increase from $5 million in 2016 to $6 million in...
Carlsbad Corporation's sales are expected to increase from $5 million in 2016 to $6 million in 2017, or by 20%. Its assets totaled $4 million at the end of 2016. Carlsbad is at full capacity, so its assets must grow in proportion to projected sales. At the end of 2016, current liabilities are $1 million, consisting of $250,000 of accounts payable, $500,000 of notes payable, and $250,000 of accrued liabilities. Its profit margin is forecasted to be 5%. Assume that...
Carlsbad Corporation's sales are expected to increase from $5 million in 2018 to $6 million in...
Carlsbad Corporation's sales are expected to increase from $5 million in 2018 to $6 million in 2019, or by 20%. Its assets totaled $4 million at the end of 2019. Carlsbad is at full capacity, so its assets must grow in proportion to projected sales. At the end of 2018, current liabilities are $1 million, consisting of $250,000 of accounts payable, $500,000 of notes payable, and $250,000 of accrued liabilities. Its profit margin is forecasted to be 7%, and the...
Carlsbad Corporation's sales are expected to increase from $5 million in 2016 to $6 million in...
Carlsbad Corporation's sales are expected to increase from $5 million in 2016 to $6 million in 2017, or by 20%. Its assets totaled $4 million at the end of 2016. Carlsbad is at full capacity, so its assets must grow in proportion to projected sales. At the end of 2016, current liabilities are $1 million, consisting of $250,000 of accounts payable, $500,000 of notes payable, and $250,000 of accrued liabilities. Its profit margin is forecasted to be 5%, and the...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT