Problema Solution
In 2001, Mark's business earned $150,000. In 2004 the business earned $234,000. If this rate of increased earnings continues, how much can Mark's business expect to earn in the year 2014?
Answer provided by our tutors
let i = the rate of increase per year
234000 = 150000(1 + i)^3
(1 + i)^3 = 234/150
by solving we find
i = 0.1598 or 15.98% per year
since 2014 - 2004 = 10 the expected earning for 2014 will be
2340000(1 + 0.1598)^10 = $1,030,497.4