Choose the one alternative that best completes the statement or answers the question.
-A baseball player signs a contract with a starting salary of $840,000 per year and an annual increase of 4.5% beginning in the second year. What will the athlete's salary be, to the nearest dollar, in the sixth year?
A) $1,048,864
B) $1,045,321
C) $1,046,793
D) $1,047,440

Question

Quizplus · Accepted Answer

The athlete's salary in the sixth year can be calculated using the formula for the future value of a series with annual increases: $S = P(1 + r)^n$, where $S$ is the future salary, $P$ is the initial salary, $r$ is the annual increase rate (as a decimal), and $n$ is the number of years. Here, $P = \$840,000$, $r = 4.5\% = 0.045$, and $n = 6 - 1 = 5$ (since the increase starts in the second year). Plugging these values in gives $S = 840,000(1 + 0.045)^5$, which calculates to approximately \$1,046,793.

Choose the One Alternative That Best Completes the Statement or Answers