Sales for Hanebury Corporations just-ended year were $12 million. Sales were $6 million 5 years earlier. a.

Question:

Sales for Hanebury Corporation’s just-ended year were $12 million. Sales were $6 million 5 years earlier.
a. At what rate did sales grow?
b. Suppose someone calculated the sales growth for Hanebury in part a as follows: “Sales doubled in 5 years. This represents a growth of 100% in 5 years; dividing 100% by 5 results in an estimated growth rate of 20% per year.” Explain what is wrong with this calculation.