An investment firm has a job opening with a salary of $41,000 for the first year. During the next 29 years, there is a 4% raise each year. Find the total compensation over the 30-year period.

Question

Business

Arnav Beard

14 November, 04:42

An investment firm has a job opening with a salary of $41,000 for the first year. During the next 29 years, there is a 4% raise each year. Find the total compensation over the 30-year period.

+1

Answers (1)

Know the Answer?

Nolan Baxter · Answer 1

12,474.61

Explanation:

This can be solve as a compound interest. The first year the employer has a salary of 4000. For second year (s) he will have an increase of 4% so 4000x0,04 = 160, and the salary so will be 4000+160=4160. Next year the salary will have another increase of 4% which will equal 4160x (1 + 0.04) = 4326.4. We could continue but as you can see there is a patron which simplifies to salary * (1 + growth rate) ^number of period.

4000 * (1.04) ^29=12,474.61