Question

In 2006, a man has given a pay increase of 10%. In 2007, he suffered a pay out of 10%. Was he better off or worse off as compared to 2005

Answer 1

Answer: The man was worse off than in 2005

Explanation:

Assume the man's salary in 2005 was $4,500.

In 2006 therefore, his salary goes to:

= 4,500 * (1 + 10%)

= $4,950

In 2007, this drops by 10%:

= 4,950 * ( 1 - 10%)

= $4,455

The man was worse off than in 2005 because the 10% reduction was based on the larger 2006 salary but the 10% increase was based on the smaller 2005 salary.