A man joined a company as Assistant Manager. The company gave him a starting salary of ₹60,000 and agreed to increase his salary 5% annually. What will be his salary after 5 years?
Solution :
Starting salary = 60,000
Every year 5% of annual salary is increasing.
Second year salary = 60000 + 5% of 60000
= 60000(1 + 5%)
Third year salary = 60000 + 5% of 60000(1 + 5%)
= 60000(1 + 5%)(1 + 5%)
= 60000(1 + 5%)2
By continuing in this way, salary after 5 years is
= 60000(1 + 5%)5
= 60000(105/100)5
= 60000(1.05)5
= 76577