Answer:
The salary during the 16th year will be US$ 62,318.70
Step-by-step explanation:
Starting salary = US$ 40,000
Duration of the job contract = 15 years
Salary increase rate = 3% compounded annually
2. Let's find the future value of this starting salary after 15 years, using the following formula:
FV = PV * (1 + r) ⁿ
PV = Starting salary = US$ 40,000
number of periods (n) = 15 (15 years compounded annually)
Salary increase rate (r) = 3% = 0.03
Replacing with the real values, we have:
FV = 40,000 * (1 + 0.03) ¹⁵
FV = 40,000 * (1.03) ¹⁵
FV = 40,000 * 1.558
FV = US$ 62,318.70
The salary during the 16th year will be US$ 62,318.70
