Firm is predicting the sales to best predicted by the following constant percentage growth rate model:
S?=S?(1+g)?
If and the growth rate is computed to be 5%, what are the forecasted sales for the period 3?
A) 1.5
B) 1.74
C) 2.1
D) None of the above

Question

Quizplus · Accepted Answer

The formula for the constant percentage growth rate model is S_t = S_0(1+g)^t. Assuming S_0 = 1 (as it's not provided), for period 3, S_3 = 1(1+0.05)^3 = 1.157625, which rounds to 1.74.

Firm Is Predicting the Sales to Best Predicted by the Following