Question 1002397: If my salary increases by 20% each year, in 5 years, I will earn exactly twice as much as I do now.
This is a True or False question. I would like to know how to solve it.
Found 2 solutions by Boreal, fractalier:
Answer by Boreal(15235)   (Show Source):
You can put this solution on YOUR website! False
(1.2)^5=2.488, almost 2 and a half times.
Your salary after 1 year is 1.2 times. But after another year the (1.2) is increased by 20%, and that is greater than the 20% in the first year. This is what is behind compound interest, debt, and investment return.
Answer by fractalier(6550)  (Show Source):
You can put this solution on YOUR website! False.
Say you made $100,000 this year.
Next year, 20% more would be $120,000.
But the year after that, you would make 20% more than the $120,000 or $144,000.
After 5 years you would be making more than double the original $100,000.
The increase compounds itself.
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