Question

Lara works at a company where she gets a set 3% raise every year. If her current salary is $30,081, what will her salary be in 13 years?

Answer 1

Lara's future salary is calculated using the compound interest formula applied to her annual raise of 3%, resulting in approximately $42,641.38 after 13 years.

Step-by-step explanation:

Lara's salary situation is a classic example of using compound interest to calculate the future value of her current salary.

Since she receives a set 3% raise each year, we can treat her annual salary increase as compounding annually. To find her salary in 13 years, we use the future value formula:

Future Value = Present Value * (1 + rate)^number of periods.

Start with her current salary, which is $30,081. With an annual raise of 3%, the rate (r) is 0.03, and the number of periods (t) is 13 years.

The future salary can be calculated as:

$30,081 * (1 + 0.03)^13

Lara's salary after 13 years would be:

$42,641.38 approximately (calculated using a financial calculator or spreadsheet software).