Question

You are offered a job that pays ​$34,000 during the first​ year, with an annual increase of ​6% per year beginning in the second year. That​ is, beginning in year​ 2, your salary will be 1.06 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

Year 1 salary: $34,000

Year 2 salary: 1.06 x $34,000 = $36,040

Year 3 salary: 1.06 x $36,040 = $38,316.40

Year 4 salary: 1.06 x $38,316.40 = $40,850.38

Rounding to the nearest dollar, you can expect to earn $40,850 in your fourth year on the job.