Growth rate: Petry Company is a growing company with sales of $1.25 million this year. The company expects to grow at an annual rate of 25 percent for the next three years, followed by a growth of 20 percent per year for the next two years. What will be Petry's sales at the end of five years? (Round to the nearest percent.)

Question

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To calculate the sales at the end of five years, apply the growth rates sequentially:  Year 1: $1.25 million * 1.25 = $1.5625 million  Year 2: $1.5625 million * 1.25 = $1.953125 million  Year 3: $1.953125 million * 1.25 = $2.44140625 million  Year 4: $2.44140625 million * 1.20 = $2.9296875 million  Year 5: $2.9296875 million * 1.20 = $3.515625 million  Rounded to the nearest percent, the sales at the end of five years will be $3,515,625.

Growth Rate: Petry Company Is a Growing Company with Sales