Given 5.0m units sold, a 20.0% growth in the next year, and the average selling price rising from $200 to $225, what is the projected year-over-year revenue growth rate?

• A. 20
• B. 35
• C. 40
• D. 15

Answer: (B)

Revenue comes from price times quantity, so start with current revenue: 5.0 million units at $200 each equals $1,000 million. Next year, volume grows 20% to 6.0 million units, and the price rises to $225. Revenue then is 6.0 million × $225 = $1,350 million. The year-over-year growth is (1,350 − 1,000) / 1,000 = 0.35, or 35%.

Both changes contribute: a 20% lift from volume and a 12.5% lift from price (since 225 is 12.5% higher than 200). The combined effect is 35% growth in revenue.