Growth rate: Cleargen, a detergent manufacturer, has announced this year's net income as $832,500. It expects its net earnings to grow at a rate of 15 percent per year for the next two years, before dropping to 12 percent for each of the following two years. What is the firm's net income after four years? (Round to the nearest dollar.)

Question

Quizplus · Accepted Answer

The net income after four years is calculated by applying the growth rates sequentially: Year 1: $832,500 * 1.15 = $957,375; Year 2: $957,375 * 1.15 = $1,100,981.25; Year 3: $1,100,981.25 * 1.12 = $1,233,099.80; Year 4: $1,233,099.80 * 1.12 = $1,381,071.78, rounded to $1,381,071.

Growth Rate: Cleargen, a Detergent Manufacturer, Has Announced This Year's