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You currently earn 800 per month but you are expecting your earnings to rise 70% per year. In five years what you expect to be earning?

You Currently Earn 800 Per Month But You Are Expecting Your Earnings To Rise 70 Per Year In Five Years What You Expect To Be Earning class=

Sagot :

To solve this problem we will use the following formula for compounded interest:

[tex]A=A_0(1+r)^t,[/tex]

where A₀ is the initial amount, r is the interest rate as a decimal number, and t is the number of years.

Substituting A₀=800, r=0.7, and t=5 we get:

[tex]A=800(1+0.7)^5.[/tex]

Simplifying the above result we get:

[tex]A=800(1.7)^5=800\cdot14.19857=11358.856\approx11358.86.[/tex]

Answer:

In five years, you should be earning about $11360 per month, because your earnings rise 70% per year, which are added to the earnings of the previous month.

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