A manufacturer of LCD televisions has seen sales increase from 125,000 units per year to 500,000 units per year in 8 years
What has been the firm's average annual rate of increase in the number of television sets sold? Use the Rule of 72 to determine your answer.
A) The average annual rate of change has been between 10% and 11%.
B) The average annual rate of change has been between 18% and 19%.
C) The average annual rate of change has been between 15% and 16%.
D) There is not enough information to answer this question.
Answer: B
Explanation: B) Unit sales doubled from 125,000 to 250,000 and doubled again to 500,000 in 8 years. Thus, at a doubling rate of every four years the Rule of 72 suggests an annual rate of = 18%. Via the formula the actual growth rate is 18.92% per year.
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