Question

A man joined a company as Assistant Manager. The company gave him a starting salary of ₹ 60,000 and agreed to increase his salary 5% annually. What will be his salary after 5 years?

Answer 1

Starting salary (a) = ₹ 60000

Increased salary = 5% of starting salary

= `5/100 xx 60000`

= ₹ 3000

Starting salary for the 2^nd year = 60000 + 3000

= ₹ 63000

Year increase = 5% of 63000

= `5/100 xx 63000`

= ₹ 3150

Starting salary for the 3^rd year = 63000 + 3150

= ₹ 66150

60000, 63000, 66150, …. form a G.P.

a = 60000; r = `(63000)/(60000) = 63/60 = 21/20`

t_n = an^n–1 

t₅ = `(60000) (21/20)^4`

= `60000 xx 21/20 xx 21/20 xx 21/20 xx 21/20`

= `(6 xx 21 xx 21 xx 21 xx 21)/(2 xx 2 xx 2 xx 2)`

= 72930.38

5% increase = `5/100 xx 72930.38`

= ₹ 3646.51
Salary after 5 years = ₹ 72930.38 + 3646.51

= ₹ 76576.90

= ₹ 76577