Results 1 to 2 of 2

Math Help - Compound Interest/Salary

  1. #1
    Newbie
    Joined
    Jan 2006
    Posts
    20

    Please Check! Compound Interest/Salary Problem

    The problem States: Suppose you just started a job at $40,000 per year, you are scheduled to be making %60,000 per year. Determine the annual exponential rate of increase that describes this situation. Assume that the same exponential rate of increase will continue for 40 years. Estimate your annual salary in 40 years.

    So, i used the formula A=P(1+r/n)^nt and found the percentage to be approx. 8.448 percent. Then in 40 years i replugged in the numbers and found that i would make $1,025,270. I'm not quite sure thats right because it seems to be too much. Am i doing something wrong? Thanks.
    Follow Math Help Forum on Facebook and Google+

  2. #2
    Global Moderator

    Joined
    Nov 2005
    From
    New York City
    Posts
    10,616
    Thanks
    9
    Quote Originally Posted by aussiekid90
    The problem States: Suppose you just started a job at $40,000 per year, you are scheduled to be making %60,000 per year. Determine the annual exponential rate of increase that describes this situation. Assume that the same exponential rate of increase will continue for 40 years. Estimate your annual salary in 40 years.

    So, i used the formula A=P(1+r/n)^nt and found the percentage to be approx. 8.448 percent. Then in 40 years i replugged in the numbers and found that i would make $1,025,270. I'm not quite sure thats right because it seems to be too much. Am i doing something wrong? Thanks.
    You did not give enough infromation but I think you mean this:
    1)You started with $40,000.
    2)Ended with $60,000.
    3)The number of times of interest a year is 12 times.
    4)Solved for rate of interest.
    I got the rate of interest to be 1.014% not what you say.
    For the second part of the problem I get $900,000 exactly.
    Follow Math Help Forum on Facebook and Google+

Similar Math Help Forum Discussions

  1. Compound interest
    Posted in the Algebra Forum
    Replies: 1
    Last Post: December 7th 2010, 05:55 AM
  2. Compound interest at changing interest rates
    Posted in the Business Math Forum
    Replies: 2
    Last Post: October 21st 2010, 04:55 AM
  3. compound interest
    Posted in the Algebra Forum
    Replies: 4
    Last Post: August 5th 2009, 04:07 PM
  4. Compound interest
    Posted in the Algebra Forum
    Replies: 1
    Last Post: November 7th 2008, 03:06 AM
  5. compound interest
    Posted in the Algebra Forum
    Replies: 5
    Last Post: April 26th 2008, 04:40 PM

Search Tags


/mathhelpforum @mathhelpforum