Answer:
11.14%
Explanation:
Blume's formula is used to combine both arithmetic and geometric returns. This is because using arithmetic growth rate exclusively would be overly optimistic for longer time horizons and on the other hand, using geometric growth rates exclusively would be overly pessimistic for short time horizons.
Using the attached formula, plug in the given numbers;
R(T) would be the sale growth rate we need to calculate.
R(T) = [tex]\frac{5-1}{15-1} *0.09 + \frac{15-5}{15-1} *0.12[/tex]
R(T) =0.0257 + 0.0857
R(T) = 0.1114 as a decimal
Therefore, the forecast sales growth would be 11.14%
