The following table shows total retail sales for the city of Taxylvania for the
ID: 2644993 • Letter: T
Question
The following table shows total retail sales for the city of Taxylvania for the last 11 years. The city is considering implementing a 1% retail sales tax in 2016. Estimate collections from a 1% retail sales tax for each of the next 3 years (2016 - 2018). Note, the data provided in the chart is total retail sales. We are forecasting a tax that is equal to 1% of all retail sales.
Year Total Retail Sales
2005 40,826,702
2006 42,045,324
2007 43,414,770
2008 44,748,197
2009 45,960,890
2010 47,382,130
2011 48,897,359
2012 50,161,860
2013 51,728,282
2014 53,256,193
2015 54,417,181
2016 ???
2017 ???
2018 ???
What is the estimate for 2016 sales tax revenues? _______________
Explanation / Answer
Compound Growth Rate = (54417181/40826702)^(1/11) -1 = 2.646632%
Estimate for 2016 Total Retail Sales = 54417181* (1+2.646632%)
Estimate for 2016 Total Retail Sales = $ 55857404
Estimate for 2016 sales tax revenues = 55857404*1%
Estimate for 2016 sales tax revenues = $ 558574
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