Chapter 11.3, Problem 13P

To determine

To calculate: Calculate who get more pay after 3 and 5 years.

Answer to Problem 13P

The Job B get more salary in both years.

Explanation of Solution

Given information:

Job A has starting salary of $12000 with annual increases of $ 800.

Job B has starting salary of $11000 with annual increases of 10%.

Salary of A and B after 3 years

Hence, salary of Job A after 3 years $=12000+800+800+800=\$14400$

Moreover, salary of Job B after 3 years:

Calculation:

  $\begin{array}{l}=11000{\left(1+\frac{10}{100}\right)}^3\\ =11000\times \frac{110}{100}\times \frac{110}{100}\times \frac{110}{100}\\ =\$14641\end{array}$

Hence, Job B get more salary = 14641−14400 = $240

Salary of A and B after 5 years Hence, salary of Job A after 5 years $=12000+800+800+800+800+800=\$16000$

Moreover, salary of Job B after 5 years:

Calculation:

  $\begin{array}{l}=11000{\left(1+\frac{10}{100}\right)}^5\\ =11000\times \frac{110}{100}\times \frac{110}{100}\times \frac{110}{100}\times \frac{110}{100}\times \frac{110}{100}\\ =\$\frac{{11}^6}{100}\\ =\$17715.61\end{array}$

Hence, Job B get more salary = 17715.61−16000 = $1715.61