Question

The starting salary of a starting teacher is $40,000, which will increase by 2% each year

What is the multiplier (growth factor) for this scenario?

1. .02
2. 1.02
3. 2
4. 1.2

Answer 1

Choice B - (1.02)

Explanation:

With the teachers starting salary being $40,000, we can rightfully assume that it their salary would not increase with Choice A, $40,000 * 0.2 = $800.

2% otherwise known as 0.02, would make the teachers yearly salary $40,000 * 1 + 0.02, or $40,000 * 1.02. Making the correct answer, Choice B - (1.02). (This would also give the teacher an additional $800 per year!)