Question

If you earn $3200 per month and you expect your earnings to increase by 6.4% per year, how much do you think you will be making in 6 years?

Answer 1

You should expect to be making $55,716.14 in 6 years.

Explanation:

Your earnings after t years is given by the following equation:

`E(t) = E(0)(1 + r)^(t)`

In which E(0) is how much you earn on the current year and r is the increase rate, as a decimal.

$3200 per month currently:

A year has 12 months. So

`E(0) = 12*3200 = 38400`

You expect your earnings to increase by 6.4% per year

So
`r = 0.064`

Then

`E(t) = E(0)(1 + r)^(t)`

`E(t) = 38400(1 + 0.064)^(t)`

`E(t) = 38400(1.064)^(t)`

How much do you think you will be making in 6 years?

This is E(6).

`E(t) = 38400(1.064)^(t)`

`E(6) = 38400(1.064)^(6) = 55716.14`

You should expect to be making $55,716.14 in 6 years.