Hey there!,
Could someone please help with the following questions? I'm stuck D:
Please refer to data above and help with the following question:
If total revenue in Exhibit 2 were to grow by 5% annually in the future and revenue from
Product B were to grow by 10% every year, which of the following would be the MINIMUM time
period required to see Product B represent more than half of the total revenue?
A) 10 years
B) 15 years
C) 20 years
D) 25 years
To answer this question use the rule of 72. It tells you the time it will take for an amount or quantity to double
Which is basically n = 72/x , n = number of years, x = growth rate
It can be used for relative growths as well. Just like here you have been given the relative growth of product b vs all the products.
Here product b accounts for roughly 25% (34/125) of all the products, for it to become 50% of all the products it has to double. Hence
n = 72/(10-5){the difference b/w growths} = ~14 years hence the correct option is C 15 years the mimimum time required to double
