SOLUTION: Please help me with this: Your employer agrees to give you a 5% raise after one year on the job, a 6% raise the next year, and a 7% raise the following year. Is your salary after

Algebra ->  Percentage-and-ratio-word-problems -> SOLUTION: Please help me with this: Your employer agrees to give you a 5% raise after one year on the job, a 6% raise the next year, and a 7% raise the following year. Is your salary after       Log On


   

Question 27656: Please help me with this: Your employer agrees to give you a 5% raise after one year on the job, a 6% raise the next year, and a 7% raise the following year. Is your salary after the third year greater than, less than, or the same as it would be if you had received a 6% raise each year? Thank you so much
Answer by bmauger(101) About Me  (Show Source):
You can put this solution on YOUR website!
Situation 1: 5% then 6% then 7% raises. Your initial salery is x. After year 1 your salery is (x*1.05) After year two your new salery (x*1.05) is increased by a factor of 1.06, so it's now (x*1.05*1.06) after year 3 your salery is
x%2A1.05%2A1.06%2A1.07=1.19091%2Ax So you've netted a 19.09% salery gain.
Situation 2: 6% raise each year. Your initial salery is x, next year it's (x*1.06), year 2 it's (x*1.06*1.06) and year 3 it's:
%28x%2A1.06%2A1.06%2A1.06%29=1.191016x And this time your salery has increased 19.10% a greater increase than through situation 1. Not only that, but it's also greater during year 1 (1.06 vs 1.05 raise) and greater during year 2 (1.1236 vs 1.113 total raise). So it's clearly the better pay scale.