Question

The local demand for cellphones this year is 4,000 units. The demand is expected to grow by 5% in the next two years and by 3% for three years after that. Our store sales accounts for 8% of the total local market. Assuming an average price of $435 per cellphone, what would be our total revenue across the next 5 years?

Answer 1

Given that,

Total cellphone demand = 4000 units

Our store account for 8% of total local market

=> Price = $435 per cell phone

So, revenue in this year = 435*0.08*4000 = $139200

demand is expected to grow by 5% in the next two years and by 3% for three years after that

=> revenue in year 1 = 139200*1.05 = $146160

revenue in year 2 = 146160*1.05 = $153468

Revenue in year 3 = 153468*1.03 = $158072.04

Revenue in year 4 = 158072.04*1.03 = $162814.20

Revenue in year 5 = 162814.20*1.03 = $167698.63

So, total revenue across the next 5 years = 146160 + 153468 + 158072.04 + 162814.20 + 167698.63 = $788212.87