Question

Pitting olives is offering you a starting salary of $65,000 with a 5% raise annually. Whole olive foods wants to offer you $68,000 with a 3% raise. Who will offer a higher salary after five years.

Answer 1

Pitting Olives will offer a higher salary after 5 years.

Explanation:

Increase in salary will be an exponential process.

Every year salary with a yearly increase of r% will be given by expression,

A =
`A_(0)(1+(r)/(100))^(t)`

Here
`A_0` = Initial salary

t = duration in years

After 5 years salary offered by Pitting olives

=
`65000(1+(5)/(100))^(5)`

=
`65000(1.05)^(5)`

= $82958.30

With the same formula, salary offered by Whole Olive foods will be

=
`68000(1+(3)/(100))^5`

=
`68000(1.03)^5`

= $78830.64

Therefore, Pitting Olives will offer a higher salary after 5 years.