Calculating future value if salary. During a job interview, Pam thompson is offered a salary of $28.000. The company gives annual raises of 6 percent. What would be Pam's salary during her fifth year on the job?
Pt = Po(1+r)^4.
Pt = 28000(1.06)^4 = $35,349.35. = Salary at end of 4th year = Salary at
beginning and during 5th yar.
To calculate Pam's salary during her fifth year on the job, we need to keep in mind that her salary will increase by 6 percent annually.
The formula to calculate the future value of a salary with compound interest is:
Future Value = Initial Value * (1 + Interest Rate)^Number of Years
In this case, the initial value is $28,000, the interest rate is 6 percent (or 0.06 as a decimal), and we want to find the future value after 5 years.
Plugging in the values into the formula, we get:
Future Value = $28,000 * (1 + 0.06)^5
Now, let's solve this equation step by step:
1. Add 1 to the interest rate: 1 + 0.06 = 1.06
2. Raise this result to the power of 5 (since it's the fifth year): 1.06^5 ≈ 1.338225
3. Multiply the initial value by the result: $28,000 * 1.338225 ≈ $37,457.15
Therefore, Pam's salary during her fifth year on the job would be approximately $37,457.15.