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Which of the following schemes would earn more IN YEAR FIVE and how much more?
Scheme A; Salary of $30000 in year 1 with each subsequent years salary being 105% of the previous year. (round up to whole dollars)
Scheme B; Salary of $20000 in year 1 with each subsequent years salary being 130% of the previous year
The answer is B by $20656
Please show workings
Thank you!
You just need to work out each salary in year 5 and then compare them.
For Scheme A, each year's salary is 1.05 x (salary the year before).
So:
Year 1: 30000
Year 2: 31500
Year 3: 33075
Year 4: 34729 (rounded up)
Year 5: 36466 (rounded up again)
The salary for Scheme B can be worked out in a similar way.
Why did the vector cross the road?
It wanted to be normal.
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