Answer to Question #207641 in Financial Math for kailash

Question

1.      A company is offering a job with a salary of Rs. 50,000.00 for the first year and a 4% raise each year after that. If that 4% raise continues every year,

a)        Find the total amount of money an employee would earn in a 10-years career.

Answer 1

The first year: $A_1=50000.$

The growth factor: $r=0.04.$

We have the geometric progression

$A_1, A_1(1+r), A_1(1+r)^2, ...$

$S_{10}=\dfrac{A_1(1-(1+r)^{10})}{1-(1+r)}$

$=\dfrac{A_1((1+r)^{10})-1}{r}$

$=\dfrac{50000((1+0.04)^{10}-1)}{0.04}=Rs\ 600305.36$

An employee would earn Rs. 600305.36 in a 10-years career.