Question

You are offered a job that pays ​$44 comma 000 during the first​ year, with an annual increase of 5​% per year beginning in the second year. That​ is, beginning in year​ 2, your salary will be 1.05 times what it was in the previous year. What can you expect to earn in your fourth year on the​ job? Round your answer to the nearest dollar.

Answer 1

$ 50936

Explanation:

Given,

The earning in first year, P = $ 44,000

If the rate of increasing of payment after completing 1 year,

r = 5% = 0.05,

Then, the earning at the beginning of (x-1)th year or after x years,

`A=P(1+r)^(x)`

`=44000(1+0.05)^(x)`

Hence, if x = 3 years,

Then the earning in beginning of fourth year or after completing 3 years,

`A=44000(1.05)^3`

`=44000(1.157625)`

`= \$ 50935.5`

`\approx \$ 50936`