Question

Suppose that your income is $33,900 per year and you receive a cost-of-living raise each year. If inflation is constant at 9.5% annually, in how many years will you bemaking $44,300 per year? Round your answer to the nearest whole number.

Answer 1

We can interpret this as a compounded interest. Remember that its formula is:

`T=P(1+r)^n`

Where:

• T, is the total amount after the investment. In this case, after the raise

,

• P, is the principal. In this case, the intial salary

,

• r, is the interest rate. In this case, the raise percentage

,

• n, is the times the interest is compounded. In this case, the times the raise is compounded.

Using this and the data given, we'll have the following equations:

`44300=33900(1+(9.5)/(100))^n`

Solving for n,