Question

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?

Answer 1

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`