Question

Let’s pretend that we want to give our employees in total a28% raise in the next two years, but we want to spread out aconsistent percent raise over two years (the same percent raise twice)to make this happen. Some justification for this could be: we can'tafford a 28% raise right now, but we don't want to lose ouremployees to the competition, so we want to start the raise processright away.a. What consistent percent raise should we give our employees each year to make our"in total a28% raise in the next two years" happen? (Be accurate with ananswer like 1.23%

Answer 1

Solution

- The solution steps are given below:

$\begin{gathered} \text{ Let the original amount be X} \\ \\ \text{ If we want a 28\% raise over the next two years, then it means that the amount will be:} \\ X+\frac{28}{100}X=1.28X \\ \\ \text{ If we want to give them a consistent raise each year, we can compute the scenario as follows:} \\ \text{ Let the percentage be }y \\ \\ X+y\%\text{ of }X=\text{ Salary after first year} \\ \\ (X+y\%\text{ of }X)+y\%\text{ of }(X+y\%\text{ of }X)\text{ = Salary after second year.} \\ \\ \text{ But we already know that the salary after second year is }1.28X \\ \text{ Thus, we can say:} \\ (X+y\%\text{ of }X)+y\%\text{ of }(X+y\%\text{ of }X)=1.28X \\ \\ \text{ Simplifying, we have:} \\ X+\frac{yX}{100}+\frac{y}{100}(X+\frac{yX}{100})=1.28X \\ \\ \text{ Divide through by }X \\ 1+\frac{y}{100}+\frac{y}{100}(1+\frac{y}{100})=1.28 \\ \\ \text{ Subtract 1 from both sides and expand the brackets} \\ \frac{y}{100}+\frac{y}{100}+(\frac{y}{100})^2=1.28-1=0.28 \\ \\ \frac{2y}{100}+(\frac{y}{100})^2=0.28 \\ \\ \text{ Multiply both sides by }100^2 \\ 200y+y^2=2800 \\ \\ \text{ Rewrite, we have:} \\ y^2+200y-2800=0 \\ \\ Solving\text{ the equation using the Quadratic formula, we have that:} \\ y=\frac{-200\pm\sqrt{200^2-4(-2800)}(1)}{2(1)} \\ \\ y=-213.137\text{ or }13.137 \\ \\ \text{ Since the change in salary is an increase, thus, the rate }y\text{ has to be positive.} \\ \text{ Thus, } \\ y=13.137\approx13.14\% \\ \\ \end{gathered}$

Final Answer

y = 13.14%

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