Chapter 12.3, Problem 83AYU

To determine

To find: The salary of fifth year.

Answer to Problem 83AYU

The annual salary beginning of fifth year is $\$21,879.11$ .

Explanation of Solution

Given information:

The given annual salary is $\$18,000$ and annual increases of $5\%$ .

Calculation:

The salary increased by $18,000\left(0.05\right)$ .

Therefore, the second and third year salaries are $\$18,000\left(1.05\right)\text{ and }\$18,000{\left(1.05\right)}^2$ respectively.

The annual salary is in geometric sequence with the common ratio $1.05$ .

Therefore, the fifth term is,

  $\$18,000{\left(1.05\right)}^{5-1}=\$18,000{\left(1.05\right)}^4=\$21,879.11$

Therefore, the annual salary beginning of fifth year is $\$21,879.11$ .