Answer to Question #298504 in Management for rocky

Question

The Finance Officer of Nakura Property Management Enterprise Limited was preparing for a meeting with the Board of Directors of the enterprise to consider the annual release of housing units. During the preparation, the Officer discovered that sales were cyclical and they were 100 units at the peak of the cycle in 2012 and 150 at the peak of 2012, 2016 sales are 200 units of houses. The F.O wanted to estimate the compound growth rate of sales and report the same to the Board of Directors for further consideration and decision-making. For that purpose, estimate the growth rate and based on that rate advise the Board.

(b) During the meeting with the Board of Directors, one of the directors requested to know the period it would take the enterprise to release 1000 units of houses, the maximum production capacity of the available resources.

Estimate the number of years it would take the enterprise to produce at its maximum capacity

Answer 1

Rate of growth $=$ $($ V end $÷$ V start)$^1÷^t$ .

$=(200÷100)^1÷^4$ .

$=1.89$ .

Where :V end is the number of the units at the end year.

V start is the number of units at the first year.

The rate of growth of sales for the firm is at $1.89$ % per annum.

The growth rate is at 1.89% per year and therefore I would advise the board directors to invest more and not to quit because, as years come by, the rate of sales is increasing exponentially.

b). The number of years the firm would take to produce 1000 units.

If with 4 years it has sold 200 units then it would take 16 years to produce 1000 units.