Question

The average annual increase in salaries for new accounting graduates has been 3.42% since the year 2000. If new starting salaries in accounting were $36,919 in 2000, what were they in 2016?

a) $48,235
b) $48,919
c) $49,235
d) $50,235

Answer 1

To find the starting salaries in 2016, we can calculate the total increase over 16 years using the average annual increase of 3.42%. The starting salary in 2016 was $49,235.

Step-by-step explanation:

To calculate the starting salaries in 2016, we need to use the average annual increase of 3.42%. We can start with the salary in 2000, which is $36,919. To find the salary in 2016, we need to calculate the total increase over 16 years using compound interest formula:

Final Salary = Starting Salary * (1 + Average Increase)^Years

Plugging in the values, we get:
Final Salary = $36,919 * (1 + 0.0342)^16 = $49,234.98
Rounded to the nearest dollar, the starting salary in 2016 was $49,235. Therefore, the correct option is c) $49,235.