OIC. The question is a bit confusing. It seems to be a an accounting question, except they have apparently confused it by using (misusing) the term "trend".

Generally speaking one will not necessarily be able to establish a significant statistical

**trend** from just 2 (or 3) successive annual data-points. A significant trend usually only emerges over longer time-series data. Thus, to be correct, there

**are no** "trends" in the data given in the example.

I would

**guess** that what the question probably means is:

If the rate of growth or decline of the factors (costs and revenues) between year 1 and year 2 is repeated in year 3, then what would the tax be?

**STEP 1:** As a quick rule of thumb, I would initially calculate the percentage net rate of growth in pre-tax revenue, between year 1 and 2, and

**project** the year 3 pre-tax revenue based on that percentage, then apply the 35% tax rate to the projected revenue, to arrive at a projected year 3 taxation figure.

The growth in pre-tax revenue would be a net factor of the sum of the rate of growth or decline of the factors (costs and revenues) between year 1 and 2.

**STEP 2:** You could show workings for a proof of that (i.e., checking the rule of thumb) by projecting the factors (costs and revenues) for year 3 and adding them up. This is usually good practice anyway (especially when using spreadsheets) since it checks your initial calculation (above) and will identify any errors made.

Having said that, you'd be surprised how many people omit such elementary checks to prove the figures calculated in spreadsheets. Reminds me of some years back in NZ when the published Treasury budgets were found to be embarrassingly out of whack by a factor of 10 because of a simple spreadsheet error, where a check of the type above would have easily identified the error prior to publication. Not a good look.