What is the constant yearly increase if the initial sale was $10,000 and over 5 years the total sales is $500,000

Question

A new business has $10,000 in sales the first year. Sales are expected to increase by a constant amount each year. What is this constant yearly increase in sales if the total sales for the first 5 years is $500,000?

A) $45,000

B) $105,000

C) $122,500

D) $12,500

Answer 1

Hello,

 

If there are $10,000 in sales after the first year then what is the constant amount over the next 4 years so the total sales is $500,000?  First, let's subtract the $10,000 from the $500,000 which equals $490,000.  Next divide $490,000 by 4 where 4 represents the number of years left to go in the 5 year range.  $490,000 divided by 4 is $122,500.

 

Check:  $10,000 + 4 x $122,500 = $500,000                                  Hope this helps!