In the year 2006, a company made $2.4 million in profit. For each consecutive year after that, their profit increased by 12%. How much would the company's profit be in the year 2010, to the nearest tenth of a million dollars?

Question

Mathematics

Jean Erickson

8 February, 02:54

In the year 2006, a company made $2.4 million in profit. For each consecutive year after that, their profit increased by 12%. How much would the company's profit be in the year 2010, to the nearest tenth of a million dollars?

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Answers (1)

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London Carey · Answer 1

Step-by-step explanation:

For each consecutive year after that, their profit increased by 12%. The growth is exponential. We would apply the formula for exponential growth which is expressed as

A = P (1 + r) ^t

Where

A represents the profit made after t years.

t represents the number of years.

P represents the initial profit made.

r represents rate of increase.

From the information given,

P = 2.4 * 10^6

r = 12% = 12/100 = 0.12

t = 4 years

Therefore,

A = 2.4 * 10^6 (1 + 0.12) ^4

A = 2.4 * 10^6 (1.12) ^4

A = 3776446.5