Question

A worker has four different job offers, each with a contract for seven years. Assuming the job descriptions are identical, which offer will allow the worker to earn the least over seven years?

Answer 1

A starting salary of $105,000 with a 4% increase each year

Explanation:

This question can be modeled as a geometric sequence over seven years

Formula

and the general formula will be:

R = k[(1+i)^n - 1]/i

Where

i represents the increase in percentage annually,

n the number of years

k the initial amount at the start of the period

First case

(125,000)(1.02^7 - 1)/0.02 = $929,285.4

Second case

(110,000)(1.03^7 - 1)/0.03 = $842,870.8

Third case

(98,000)(1.08^7 - 1)/0.08 = $874,434.7

Fourth case

(105,000)(1.04^7 - 1)/0.04 = $829,320.9

The least attractive offer is the fourth case a starting salary of $105,000 with a 4% increase each year

Answer 2

The least attractive offer is the fourth case a starting salary of $105,000 with a 4% increase each year

Explanation:

I attach the full question below

This question can be modeled as a geometric sequence over seven years

Formula

and the general formula will be:

R = k[(1+i)^n - 1]/i

Where

i represents the increase in percentage annualy,

n the number of years

k the initial amount at the start of the period

First case

(125,000)(1.02^7 - 1)/0.02 = $929,285.4

Second case

(110,000)(1.03^7 - 1)/0.03 = $842,870.8

Third case

(98,000)(1.08^7 - 1)/0.08 = $874,434.7

Fourth case

(105,000)(1.04^7 - 1)/0.04 = $829,320.9

The least attractive offer is the fourth case a starting salary of $105,000 with a 4% increase each year