Question

If you earn $3050 per month and you expect your earnings to increase by 3.7% per year, how much do you think you will be making in 5 years?

(Express your answer rounded correctly to the nearest cent!)

Answer 1

To calculate the amount you will be making in 5 years, we need to use the formula:

Future value = Present value x (1 + rate of increase)^number of years

Here, the present value is $3050 per month, the rate of increase is 3.7%, and the number of years is 5. Plugging in the values, we get:

Future value = 3050 x (1 + 0.037)^5

Future value = 3050 x 1.2168

Future value = $3710.08 (rounded to the nearest cent)

Therefore, you can expect to be making $3710.08 per month in 5 years, assuming a 3.7% annual increase.