The estimated revenue for Micro Chip Computer Corporation is arrived at by implementing an expected growth rate of 10 percent in the sales value of 2008 which is $8,334.
Estimated Revenue for 2009 = $8,334 + 10 percent of $8,334
Estimated Revenue for 2009 = $8,334 + 833.4
Estimated Revenue for 2009 = $9,167.4
The trend in the growth rates of the company through 2004-2008 indicates a steady increase with the exception of 2006 and 2007 where the growth rate has sharply declined which could be attributed to a variety of reasons such as an economic downturn, sudden decline in demand, seasonal factors and other unexpected elements affecting consumer behavior and company sales. Based on the trend in growth rates from 2004 to 2008 it can be assumed that the company will accomplish its target of $9,167.4 in sales based on a 10 percent growth rate. An alternative suggested technique for forecasting future growth rates is the Average Annual or Compounded Annual Growth Rate method where the average growth rate of all the previous years of operations is accumulated and averaged out to predict the growth rate of a future year (Investopedia, 2009).
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