Increasing at a constant rate, a company’s profits y have gone from $535 million in 1985 to $570 million in 1990. Find the expected level of profit for 1995 if the trend continues.

Letting x = 0 for 1985 and x = 5 for 1990, we have two points on a graph: (0, 535) and (5, 570).

Since profits y are changing at a constant rate, the slope (Δy/Δx) is constant and the two points can be connected by a straight line, as in Fig. 2-22.

Then using the two-point formula to find the slope, we have

With (0, 535) the vertical intercept, we can now write

Then substituting x = 10 for 1995, we have

Transcribed Image Text:

(0, 535) (5,570) (10, 605) 1985 1990 1995 x