Hanebury Corporation’s current sales were $12 million. Sales were $6 million 5 years earlier.
Suppose someone calculated the sales growth for Hanebury Corporation in part a as follows: “Sales
doubled in 5 years. This represents a growth of 100 percent in 5 years, so, dividing 100 percent by 5,
we find the growth rate to be 20 percent per year.” Explain what is wrong with this calculation. To the
nearest percentage point, at what rate have sales been growing?