Rent-A-Car, Inc., provides daily auto rental services - 39863

Solution Posted by
Solution Detail
Price: $5.00
  • From: Mathematics,
  • Posted on: Fri 27 Dec, 2013
  • Request id: None
  • Purchased: 0 time(s)
  • Average Rating: No rating
Request Description

Rent-A-Car, Inc., provides daily auto rental services to individuals while their own cars are being repaired. Annual sales revenue has grown rapidly from $2.5 million to $10 million during the past 5-year period. Calculate the five-year growth rate in sales using the constant growth model with annual compounding.

Solution Description

Using constant growth model with annual compounding, we have

E(t) = E(0) * (1 + g)^t