Hanebury Corporation’s current sales were $12 million. Sales were $6 million 5 years earlier.
a. To the nearest percentage point, at what rate have sales been growing?
b. Suppose someone calculated the sales growth for Hanebury Corporation in part a as follows: “Sales doubled in 5 years. This represents a growth of 100% in 5 years, so, dividing 100% by 5, we find the growth rate to be 20% per year.” Explain what is wrong with this calculation.