Suppose your business made a profit of $5500 the first year. If the profit increased 20% per year, how do you find the total profit over the first 5 years?

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Answer 1 · 2017-10-10T11:46:55

Total profit over first #5# years is #$40928.80#

The profit in first year is #$5500#

The profit in 2nd year is #5500* (1+20/100) or 5500*1.2 #

The profit in 3rd year is # 5500*1.2*1.2 # and so on.

It is a geometrical progression series of which first term is

#a_1=5500# , common ratio is #r=1.2# and number of terms is

#n=5# . We know sum G.P series is #S_n=a_1 *( r^n-1)/(r-1)#

# :. S_5=5500 *( 1.2^5-1)/(1.2-1) =(5500( 1.2^5-1))/0.2# or

# S_5=27500 *( 1.2^5-1) = $40928.80#

Total profit over first #5# years is #$40928.80# [Ans]