   Chapter 11.I, Problem 39RE ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447

#### Solutions

Chapter
Section ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447
Textbook Problem

# Gabriel Hopen, a 32-year-old commercial artist, has just signed a contract with an advertising agency. Gabriel’s starting salary is $47,800. The agency has agreed to increase his salary by 8.5% annually. How much will Gabriel’s salary be after 5 years? Round to the nearest whole dollar. To determine To calculate: The Gabriel’s salary after 5 years was$47,800 when agency has agreed to

increase his salary 8.5% annually.

Explanation

Given information:

Gabriel’s starting salary was $47,800. His agency has agreed to increase his salary 8.5% annually. Formula used: Compounding period can be defined as the duration or length of time from one interest payment to the next. If an investment made for 4 years at 6% compounded annually (once per year) then it would have four compounding periods which can be calculated by the formula given below: Compounding periods=Term of investments(years)×m Here, m is the period per year. The interest rate per period can be calculated by dividing the annual, or nominal, rate by the number of periods per year, Interest rate per period=Nominal ratePeriod per year The compound amount (Future value) can be calculated by the formula given below: A=P×(1+i)n Here, P is the principal, i is the rate per period and n is the compounding period. Calculation: Consider the statement as “Gabriel’s starting salary was$47,800. His agency has agreed to increase his salary 8.5% annually. Calculate Gabriel’s salary after 5 years

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