The starting salary for a new employee is $25000. The salary for this employee increases by 8% per year. What is the salary after 6 months? After 1 yr? After 3 yr? After 5 yr?

1 Answer
Dec 8, 2017

Use formula for simple interest (see explanation)

Explanation:

Using the formula for simple interest

I = PRN
For N = 6 " months " = 0.5 year

I = 25000 * 8/100 * 0.5

I = 1000

A = P + I = 25000 + 1000 = 26000
where A is the salary including interest.

Similarly when N = 1

I = PRN = 25000 * 8/100 * 1

I = 2000
A = P + I = 25000 + 2000 = 27000

N = 3
I = PRN = 25000 * 8/100 * 3
I = 6000

A = P + I = 31000

N = 5
I = PRN = 25000 * 8/100 * 5 = 10000
A = 35000