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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: Revenues Inflation Rate GDP Growth Rate 2016 $1.5 million 2017 $1.9 million 2% 3% 2018 $2.7 million 2.5% 4% 2019 $2.3 million 3% 5% - $50,000 - $20,000 2020 $1.4 million Salaries and Wages (Commission based) - $150,000 • Office Rent - $100,000 2.4% 3% 2021 $1.7 million 1.9% 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. 2% Expenses of the company include both fixed and variable expenses. In 2021, the following expenses were recorded: . • Depreciation Expense • Delivery Expense (Products) ing 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.

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: Revenues Inflation Rate GDP Growth Rate 2016 $1.5 million 2017 $1.9 million 2% 3% 2018 $2.7 million 2.5% 4% 2019 $2.3 million 3% 5% - $50,000 - $20,000 2020 $1.4 million Salaries and Wages (Commission based) - $150,000 • Office Rent - $100,000 2.4% 3% 2021 $1.7 million 1.9% 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. 2% Expenses of the company include both fixed and variable expenses. In 2021, the following expenses were recorded: . • Depreciation Expense • Delivery Expense (Products) ing 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.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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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 2017 2018 2019 2020 2021 Revenues $1.5 million $1.9 million $2.7 million $2.3 million $1.4 million $1.7 million Inflation Rate 2% 2.5% 3% 2.4% 1.9% GDP Growth 3% 4% 5% 3% 2% Rate 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 • Depreciation Expense • Delivery Expense (Products) - S100,000 - $50,000 - $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 rate, forecast the revenue and expenses of Armaplex for 2022 and 2023. c) Which of the two methods do you think is more effective in forecasting and why?
Transcribed Image Text: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 2017 2018 2019 2020 2021 Revenues $1.5 million $1.9 million $2.7 million $2.3 million $1.4 million $1.7 million Inflation Rate 2% 2.5% 3% 2.4% 1.9% GDP Growth 3% 4% 5% 3% 2% Rate 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 • Depreciation Expense • Delivery Expense (Products) - S100,000 - $50,000 - $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 rate, forecast the revenue and expenses of Armaplex for 2022 and 2023. c) Which of the two methods do you think is more effective in forecasting and why?
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