The line chart, as detailed in your \"Graph Charts\" Excel spreadsheet, shows sa

Question

The line chart, as detailed in your "Graph Charts" Excel spreadsheet, shows sales increasing over the years, after an initial few rocky years from 1999 to 2002. In 2015, sales slightly decreased to under $4,000,000. Investors want to know what the projected sales will be in 2017. One method for determining this value is to calculate the average percentage growth, based on historical trends. For example, if sales were $200 last year and $500 this year, the average percentage growth between these years was 150%. ((500-200)/200)*100. Calculate the average percentage growth for 2002–2015 and projected sales for 2016 and 2017.

Sales Data: Yr Sales 1999 ($527,000) 2000 $1,215,000 2001 ($257,000) 2002 $985,000 2003 $1,274,000 2004 $1,578,000 2005 $2,061,000 2006 $1,987,000 2007 $2,057,000 2008 $2,565,000 2009 $2,467,000 2010 $3,846,000 2011 $3,252,000 2012 $4,226,000 2013 $4,844,000 2014 $4,922,000 2015 $3,702,000

Explanation / Answer

Percent growth is the difference in the two amounts divided by the original amount.

So the 2002 amount was $985000 and the 2015 amount was $3702000

So subtract these values and divide by the original amount:

(3702000 - 985000) / 985000

2717000 / 985000

2.7584

or

275.84% increase.

Since that's the total increase percentage but we want the average annual percent increase, divide that by 13 (the

number of years between the two dates:

2.7584 / 13 = 0.2122 or 21.22%

So using that as your increase for projections, add this percent to the 2015 amount to get the 2016 amount and do

again for 2017.

An increase of 21.22% can be done by multiplying the value by 1.2122

Doing so we get:

3702000 * 1.2122 = $4487564.4 for 2016

Previous amount * 1.2122 = $5439825.57 for 2017

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