Animist Designers has generated sales of $625,000 for the current year. If it can grow the sales at a rate of 12 percent every year, how long will it take to triple the sales? (Round off to the nearest year.)
A) 8 years
B) 7 years
C) 10 years
D) 9 years

Question

Quizplus · Accepted Answer

To calculate the number of years required to triple the sales, we need to use the compound interest formula:

A = P(1 + r) ^ n

Where A is the future value, P is the present value, r is the annual growth rate, and n is the number of years.

Let P = $625,000 and A = $1,875,000 (triple the current sales)

1,875,000 = 625,000(1 + 0.12) ^ n

Taking logarithms on both sides, we get:

log(1.875) = log(1.12) * n + log(625)

n = (log(1.875) - log(625)) / log(1.12)

n ≈ 9.4

Rounding off to the nearest year, it will take about 10 years to triple the sales. Therefore, the best choice is C.

Animist Designers Has Generated Sales of $625,000 for the Current