Question: a. Freds Hardware and Hobby House expects its sales to increase at a constant rate of 8 percent per year over the next three years.

a. Fred’s Hardware and Hobby House expects its sales to increase at a constant rate of 8 percent per year over the next three years. Current sales are $100,000. Forecast sales for each of the next three years.

b. If sales in 2003 were $60,000 and they grew to $100,000 by 2007 (a four-year period), what was the actual annual compound growth rate?

c. What are some of the hazards of employing a constant rate of growth forecasting model?

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