Answer:
To calculate the salary after 5 years, we need to apply the given annual increase of 2.5% to the starting salary for each year. We can use the formula for compound interest:
A = P * (1 + r)^n
Where:
A = final amount
P = starting amount
r = annual interest rate (as a decimal)
n = number of years
In this case, P = $65,000, r = 0.025 (2.5% as a decimal), and n = 5. Plugging these values into the formula, we get:
A = $65,000 * (1 + 0.025)^5
A = $74,774.67
Therefore, the salary after 5 years will be approximately $74,775.