Chapter 9.7, Problem 1CYU

To determine

How much will Ms.Acosta earn in 7 years

Answer to Problem 1CYU

She earn in 7 years is $\$5173160.39$

Explanation of Solution

Given information:

Starting salary is $34000 and she will receive a 1.5% increase in her salary every year

So the value is

  $\begin{array}{l}P=34000\\ t=7\\ r=1.5\%\\ =\frac{1.5}{100}\\ =1.05\end{array}$

Concept used:

• The formula for compound interest: $A=P{\left(1+\frac{r}{n}\right)}^{nt}$
• Where
  $\begin{array}{l}A=\text{final}\text{amount}\\ P=\text{principal}\text{balance}\\ r=\text{rate}\text{of}\text{interest}\\ n=\text{number}\text{of}\text{times}\text{intrest}\text{applied}\text{per}\text{time}\text{period}\\ t=\text{number}\text{of}\text{time}\text{periods}\end{array}$

Calculation:

To find how much she earn in 7 years is as below:

  $\begin{array}{c}A=P{\left(1+\frac{r}{n}\right)}^{nt}\\ =34000{\left(1+1.05\right)}^7\\ =34000{\left(2.05\right)}^7\\ =34000\times 152.15\\ A=5173160.39\end{array}$

Thus, she earn in 7 years is $\$5173160.39$