Your annual salary 12 years ago was $14,500; it is now $25,000. What is the average annual rate of increase?
25 = (1+r)^12 * 14.5
let z = 1+r
1.724 = z^12
12 log z = log 1.724
log z = .019714
z = 1.0464
so r = 0.0464
so 4.64 percent
To calculate the average annual rate of increase, we need to find the difference in salary over the 12-year period and divide it by the number of years.
The difference in salary is calculated by subtracting the initial salary from the final salary:
$25,000 - $14,500 = $10,500.
The average annual rate of increase is then calculated by dividing the difference in salary by the number of years:
$10,500 / 12 = $875.
Therefore, the average annual rate of increase in salary over the 12-year period is $875.
To find the average annual rate of increase in salary over the given 12-year period, you can use the formula:
Average annual rate of increase = (Ending value - Starting value) / Number of years
In this case, the starting value is $14,500, the ending value is $25,000, and the number of years is 12. Plugging these values into the formula, we get:
Average annual rate of increase = ($25,000 - $14,500) / 12
Calculating the numerator:
$25,000 - $14,500 = $10,500
Now, we can substitute it back into the formula:
Average annual rate of increase = $10,500 / 12
Dividing $10,500 by 12:
Average annual rate of increase ≈ $875
Therefore, the average annual rate of increase in salary over the past 12 years is approximately $875.