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

90.2K

Verified Solution

Question

Finance

Growth Rates
Sales for Hanebury Corporation's just-ended year were $20million. Sales were $10 million 5 years earlier.
At what rate did sales grow? Do not round intermediatecalculations. Round your answer to two decimal places.
%
Suppose someone calculated the sales growth for HaneburyCorporation in part a as follows: "Sales doubled in 5 years. Thisrepresents a growth of 100% in 5 years; dividing 100% by 5 resultsin an estimated growth rate of 20% per year." Explain what is wrongwith this calculation.
choices-Select-The statement is incorrect since the effect ofcompounding is not considered.The statement is correct because 100%divided by 5 equals 20%.The statement is incorrect because thereare 6 years of sales growth between initial and final years.Thestatement is incorrect because a company's sales cannot double insuch a short time span.The statement is correct since the effect ofdiscounting is considered.

Answer & Explanation Solved by verified expert

4.1 Ratings (857 Votes)

SEE THE See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

Growth RatesSales for Hanebury Corporation's just-ended year were $20million. Sales were $10 million 5 years earlier.At what rate did sales grow? Do not round intermediatecalculations. Round your answer to two decimal places. %Suppose someone calculated the sales growth for HaneburyCorporation in part a as follows: "Sales doubled in 5 years. Thisrepresents a growth of 100% in 5 years; dividing 100% by 5 resultsin an estimated growth rate of 20% per year." Explain what is wrongwith this calculation.choices-Select-The statement is incorrect since the effect ofcompounding is not considered.The statement is correct because 100%divided by 5 equals 20%.The statement is incorrect because thereare 6 years of sales growth between initial and final years.Thestatement is incorrect because a company's sales cannot double insuch a short time span.The statement is correct since the effect ofdiscounting is considered.