Question

As a graduating senior, Cindy Clear of Manhattan, New York, is eager to enter the job market at an anticipated annual salary of $44,000. Assuming an average inflation rate of 5 percent and an equal cost-of-living raise, what will Cindy’s salary be in 10 years?

Answer 1

Cindy's salary in 10 years will be of $71,671.

Explanation:

Her salary after n years, with an inflation rate of r(decimal), is given by the following formula:

`S(n)=S(0)(1+r)^n`

In which S(0) is the initial salary.

In this question:

Initial salary: S(0) = 44000

Inflation rate: 5%, so r = 0.05.

10 years, so n = 10.

`S(10)=44000(1+0.05)^(10)=44000(1.05)^(10)=71671`

Cindy's salary in 10 years will be of $71,671.