PRC-2 · Chapter 3 · Question 16 of 45
A tech company develops a new product projected to earn Rs. 150 million in revenue during its first year. If revenue strictly declines by 25% each subsequent year, what is the total projected revenue over the infinite life of the product?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Rs. 600 million
Explanation
This forms an infinite geometric progression where a = 150. A 25% decline means the common ratio 'r' is 1 - 0.25 = 0.75. Using the sum to infinity formula S = a / (1 - r) yields 150 / 0.25 = 600 million.
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