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2. Growth formulas. a. A new firm is about to launch its new product. The initial sales in the current year are $2 million. Sales
2. Growth formulas. a. A new firm is about to launch its new product. The initial sales in the current year are $2 million. Sales are projected to increase at a rate of 20% per year for the next 5 years, and then increase at the rate of 10% per year each year thereafter. What will the sales be in year 10 - write down the formula. b. A firm is launching a new product. Call the level of sales as quantity (units sold) q. Revenues are tied to sales as Rev = 20 * q. Costs are tied to sales as Cost = 5* q + 200. Quantity starts at 1 unit and rises at the rate of 100% per year. In what year will this product first break even or earn a positive profit (profit equals revenues minus costs)
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