Problema Solution
If your starting salary were $50,000 and you received a 4% increase at the end of every year for 15 years, what would be the total amount, in dollars, you would have earned over the first 16 years that you worked?
Answer provided by our tutors
starting salary: $50,000
end of year 1: 50,000 + 0.04*50,000 = 1,04*50,000
end of year 2: (1,04^2)*50,000
...........
end of year 15: (1.04^15)*50,000
this is a geometric progression
we need to find the geometric series that is the sum of the 16 terms:
50,000 + 1.04*50,000 + (1.04^2)*50,000 + (1.04^3)*50,000 + .....+(1.04^15)*50,000 =
= 50,000(1 + 1.04 + 1.04^2 + ... + 1.04^15) =
= 50,000(1 - 1.04^16)/(1 - 1.04) = $1,091,225.56
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the total amount that i would have earned over the first 16 years that i worked would be $1,091,225.56.