Chapter $5$

Exercise Problem #$2($p$\mathrm{.}169-$ Managerial Economics$)$

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?