Question

Rachel's starting salary was $45,000 per year.

Rachel received a 3.7% raise every year after her first
year. How much is Rachel making now, & years later?

Answer 1

After 1 year $46,665

Vf = Vi ( 1 + r/m) ^ tm

Explanation:

Vf = Final Value

Vi = Initial Value ($45,000)

r = Interest Rate (3.7%, put in decimal form so .037)

m = Compound Rate (amount of times it increases every year, for this it would be 1)

t = Amount of years you are forecasting

45000 * (1 + .037)²

45000 * (1.037)²

45000 * 1.075369

$48,391.605 in 2 years