A company had a profit of $350,000 in its first year. Since then, the company's profit has decreased by 12% per year. Assuming this trend continues, what is the total profit the company can make over the course of its lifetime? Round your answer to the nearest dollar.

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PiaDeveau PiaDeveau · Answer 1 · 2020-04-08T07:20:34+02:00

Answer:

Sn = $2,916,666.67

Explanation:

Given:

First year profit (PV) = $350,000

Rate of trend (r) = -12% = -0.12

It is assume that firm doing his business continuously.

Formula to find geometric mean:

It is assumed that firms using the sum of geometric formula to find the trend.

Sn = a[1/Rate of trend]

Sn = $350,00[1/0.12]

Sn = $2,916,666.67

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abiolataiwo2015 abiolataiwo2015 · Answer 2 · 2021-11-26T16:27:16+01:00

The total profit the company can make over the course of its lifetime is $2,916,666.67.

Given:

Profit=$350,000

Decreased in profit=12%

Hence:

Total profit=$350,000/[1-(1-.12)]

Total profit=$350,000/(1-.88)

Total profit=$350,000/.12

Total profit=$2,916,666.67

Inconclusion the total profit the company can make over the course of its lifetime is $2,916,666.67.

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