Fred's Hardware and Hobby House expects its sales to increase at a constant rate of 6 percent per year over the next three years. Current sales are $500,000.

Complete the following table by forecasting sales for each of the next three years.

Year 1 Forecasted Sales (Dollars) ____________ ($583,333 or $530,000 or $470,000)

Year 2 Forecasted Sales (Dollars) ____________ ($680,556 or $561,800 or $441,800)

Year 3 Forecasted Sales (Dollars) ____________ ($415,292 or $595,508 or $793,981)

If sales in 2003 were $300,000 and they grew to $500,000 by 2007 (a four-year period), the actual annual compound growth rate was:

A. 10.76%

B. 18.56%

C. 13.62%

Which of the following are some of the hazards of employing a constant rate of growth forecasting model?Check all that apply.

A. It assumes that there are no cyclical variations.

B. It is ill-suited to estimate secular trends.

C. It ignores seasonal trends.