1. Armaplex Security Company hired to forecast their revenues and expenses for the next two years. The following information is provided to you related to revenues and expenses: 2016 $1.5 million 2017 $1.9 million 2018 $2.7 million 2019 $2.3 million 2020 $1.4 million 2021 $1.7 million Revenues Inflation Rate 2% 2.5% 3% 2.4% 1.9% GDP Growth Rate 3% 4% 5% 3% 2% The expected Inflation rate and GDP Growth Rate of 2022 are 2% and 3% respectively. The expected Inflation rate and GDP Growth Rate of 2023 are 1.5% and 4% respectively. Expenses of the company include both fixed and variable expenses. In 2021, the following expenses were recorded: Salaries and Wages (Commission based) - $150,000 Office Rent - $100,000 Depreciation Expense - $50,000 Delivery Expense (Products) - $20,000 Using the above information calculate the following: a) Using the 5-year average growth rate, forecast the revenue and expenses of Armaplex for 2022 and 2023 b) Using the 5-year average real growth rato forecast the revenue and expenses of Armaplex for 2022 a Page23.1 1 2 + c) Which of the two methods do you think is more effective in forecasting and why? (2) 1. Armaplex Security Company hired to forecast their revenues and expenses for the next two years. The following information is provided to you related to revenues and expenses: 2016 $1.5 million 2017 $1.9 million 2018 $2.7 million 2019 $2.3 million 2020 $1.4 million 2021 $1.7 million Revenues Inflation Rate 2% 2.5% 3% 2.4% 1.9% GDP Growth Rate 3% 4% 5% 3% 2% The expected Inflation rate and GDP Growth Rate of 2022 are 2% and 3% respectively. The expected Inflation rate and GDP Growth Rate of 2023 are 1.5% and 4% respectively. Expenses of the company include both fixed and variable expenses. In 2021, the following expenses were recorded: Salaries and Wages (Commission based) - $150,000 Office Rent - $100,000 Depreciation Expense - $50,000 Delivery Expense (Products) - $20,000 Using the above information calculate the following: a) Using the 5-year average growth rate, forecast the revenue and expenses of Armaplex for 2022 and 2023 b) Using the 5-year average real growth rato forecast the revenue and expenses of Armaplex for 2022 a Page23.1 1 2 + c) Which of the two methods do you think is more effective in forecasting and why? (2)