An accountant for a certain state models the sales tax revenue that the state has earned over several years. The model shows that sales tax revenue grew by 15% per year until 2 years ago, when it started to grow by $179.5 million per year. If the sales tax revenue 2 years ago was $2.1 billion, approximately how much lower is the sales tax revenue this year than it would be if it had continued growing by 15% per year? (Note: 1 billion =1,000 million) Choose 1 answer: A) $136 million B) $318 million (C) $2.05 billion (D) $5.24 billion

Question

An accountant for a certain state models the sales tax revenue that the state has earned over several years. The model shows that sales tax revenue grew by  15% per year until 2 years ago, when it started to grow by  $179.5 million per year. If the sales tax revenue 2 years ago was  $2.1 billion, approximately how much lower is the sales tax revenue this year than it would be if it had continued growing by  15% per year? (Note: 1 billion  =1,000 million) Choose 1 answer: A)  $136 million B)  $318 million (C)  $2.05 billion (D)  $5.24 billion

Bytelearn · Accepted Answer

Calculate Initial Revenue: Let's first calculate what the sales tax revenue would be this year if it had continued growing by 15% per year. Two years ago, the revenue was $2.1 billion. To find the revenue after one year with a 15% increase, we use the formula: Revenue after one year = Initial revenue * (1 + growth rate)Calculate Revenue After One Year: Calculating the revenue after one year with a 15% increase: Revenue after one year = $2.1 billion * (1 + 0.15) Revenue after one year = $2.1 billion * 1.15 Revenue after one year = $2.415 billionCalculate Revenue After Two Years: Now, let's calculate the revenue after the second year with another 15% increase: Revenue after two years = Revenue after one year * (1 + growth rate)Calculate Actual Revenue This Year: Calculating the revenue after two years with a 15% increase: Revenue after two years = $2.415 billion * (1 + 0.15) Revenue after two years = $2.415 billion * 1.15 Revenue after two years = $2.77725 billionFind the Difference: Next, we need to calculate the actual sales tax revenue for this year, which is growing by $179.5 million per year instead of 15%. Two years ago, the revenue was $2.1 billion. So after two years of growing by $179.5 million each year, the revenue would be: Revenue this year = Revenue two years ago + 2 * Annual growth in millionsRound the Difference: Calculating the actual revenue this year: Revenue this year = $2.1 billion + 2 * $179.5 million Revenue this year = $2.1 billion + $359 million Revenue this year = $2.459 billionNow we can find the difference between the revenue if it had grown by 15% per year and the actual revenue growing by $179.5 million per year: Difference = Revenue with 15% growth - Actual revenue this yearCalculating the difference: Difference = $2.77725 billion - $2.459 billion Difference = $0.31825 billion Difference = $318.25 millionSince we need to approximate, we can round the difference to the nearest million, which gives us: Difference ≈ $318 million

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