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Fundamentals of Financial Manageme...

14th Edition
Eugene F. Brigham + 1 other
ISBN: 9781285867977

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BuyFindarrow_forward

Fundamentals of Financial Manageme...

14th Edition
Eugene F. Brigham + 1 other
ISBN: 9781285867977
Textbook Problem

GROWTH RATES Shalit Corporation’s 2014 sales were $12 million. Its 2009 sales were $6 million.

  1. a. At what rate have sales been growing?
  2. b. 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?

a.

Summary Introduction

To Determine: The level at which the sales was growing.

Introduction: Growth rates allude to the rate change of a particular variable inside a particular day and age and given a specific setting. For the investors, growth rates normally speak to the aggravated annualized growth rate of an organization's incomes, profit etc.

Explanation

Determine the level at which the sales was growing

Using a excel spreadsheet and excel function =RATE, the level at which the sales was growing is determined as 14.87%.

Excel Spreadsheet:

b.

Summary Introduction

To Determine: Whether the statement is correct if the growth rate is 20% per year.

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