Question

Stephen's current hourly pay is $10.30. If he receives a 4.5% hourly pay increase each year, what will his hourly pay be in two years?

$14.94
$11.25
$10.76
$15.00

Answer 1

$11.25

Explanation:

If Stephen receives a 4.5% hourly pay increase each year, his hourly pay will be $10.30 + (4.5% * $10.30) = $10.30 + $0.465 = $10.765 after the first year.

In the second year, his hourly pay will be $10.765 + (4.5% * $10.765) = $10.765 + $0.486 = $11.251.

Therefore, in two years, Stephen's hourly pay will be $11.251. This is closest to the answer choice of $11.25, so it is the correct answer.