Personal Finance 1st Edition by Jack R. Kapoor

Exercise 16

Calculating Future Value of Salary. During a job interview, Pam Thompson is offered a salary of $28,000. The company gives annual raises of 4 percent. What would be Pam’s salary during her fifth year on the job?

Step 1 of 2

PT is offered to get the salary of $28,000. Company increases the salary at 4% each year. Hence, PT salary will be increased by 4% each year.

Salary of PT in fifth year can be calculated by using the future value formula:

Here,