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A company's sales grew by 20% in the first year and by 80% in the second. What was the average annual growth rate over the two years?

Competition practiceStatistics
  • A48%
  • B46.97%
  • C50%
  • D44%

Step-by-Step Solution

Growth compounds, so use the geometric mean of the factors: , i.e. about 46.97% a year. (50% is the arithmetic mean of the rates, which overstates it.)
Answer: B) 46.97%

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