Industry Analysis

Sales grow 1% faster than projected nominal global GDP growth. The projected global GDP growth rate is 4.5%. What is projected sales growth rate?

Is it 4.5%*(1+1%) or 4.5%+1% ?

The curriculum uses the first one and topic test uses the second one.

I haven’t taken the topic tests yet. But for me, the second formula is conventionally not correct.

In the exam, I’ll use only the first one.

isn’t it 1.045*1.01?

From topic test Equity - Darwin

sales to grow 1% faster than projected nominal global GDP growth



GDP + 1% = 5.5% increase

9,280 × 1.055


I use only the first formula: growthSale = growthGDP*(1+increasingRate) . I don’t use the second formula growthSale = growthGDP+increasingRate

But if you hesitate between the two formulas. In my opinion, you can try this trick: :slight_smile:

  • If increasingRate >10%: use the first formula. (If you use the second one, growthSale will be greater than 10%, this is unlikely possible in reality)

  • If increasingRate <2% : use the second formula. (If you use the first ond one, the difference between growthSale and growthGDP is too small, this is unlikely possible in exam).

  • If 2%<=increasingRate<= 10%: flip a coin, you have 50% of having the right answer. :slight_smile:

Seriously, if you hesitate, I recommend this trick.