Essay frame

A bakery's sales are Rs. 400,000 in year 1 and grow 10% a year. (a) Find sales in year 5. (b) Find total sales over 5 years. (c) Compare with sales that grow by Rs. 40,000 a year instead.

How to lay out the answer. Follow the frame, then write it in your own words.

1 · Identify the GP. a = 400,000, r = 1.1, n = 5.
2 · (a) nth term. T5 = 400,000 × 1.1⁴ = Rs. 585,640.
3 · (b) Sum. S5 = 400,000 (1.1⁵ − 1) ÷ 0.1 = 400,000 × 6.1051 = Rs. 2,442,040.
4 · (c) The AP alternative. a = 400,000, d = 40,000: S5 = 5/2 [800,000 + 4 × 40,000] = Rs. 2,400,000.
5 · Compare. GP total − AP total = 2,442,040 − 2,400,000 = Rs. 42,040 more under percentage growth.
6 · Business link. Percentage growth compounds, so the gap widens every year; managers should state which kind of growth a forecast assumes.