Answer:
a. Chun Kumora's salary in ten years=$72,571.48
b. Chun Kumora's salary in twenty years=$97,530.01
c. Amount of raise Chun needs to receive next year=$1,620
d. Amount of raise Chun needs to receive the year after=$3,288.60
Explanation:
When choosing a career, there are various factors that need to be considered. One such factor is the salary. The expected salary should match with the salary average salary in the market. In our case, the annual salary is expected to be $54,000, but in order to estimate future salary requirements, the inflation rate has to be considered since the value of money reduces with time. Lets solve Chun Kumora's case as follows;
a. Salary in ten Years
The future value of the $54,000 salary in ten years while accounting for inflation can be expressed as;
F.V=P.V(1+r)^n
where;
F.V=future value
P.V=present value
r=inflation rate
n=number of years
In our case;
F.V=unknown, yet to be determined
P.V=$54,000
r=3%=3/100=0.03
n=10 years
replacing;
F.V=54,000(1+0.03)^10
F.V=54,000(1.03)^10
F.V=$72,571.48
Chun Kumora's salary in ten years=$72,571.48
b. Salary in twenty Years
The future value of the $54,000 salary in twenty years while accounting for inflation can be expressed as;
F.V=P.V(1+r)^n
where;
F.V=future value
P.V=present value
r=inflation rate
n=number of years
In our case;
F.V=unknown, yet to be determined
P.V=$54,000
r=3%=3/100=0.03
n=20 years
replacing;
F.V=54,000(1+0.03)^20
F.V=54,000(1.03)^20
F.V=$97,530.01
Chun Kumora's salary in twenty years=$97,530.01
c.
Amount of raise Chun needs to receive next year;
In our case;
F.V=unknown, yet to be determined
P.V=$54,000
r=3%=3/100=0.03
n=1 year
replacing;
F.V=54,000(1+0.03)^1
F.V=54,000(1.03)^1
F.V=$55,620
Raise=Amount next year-current amount
where;
Amount next year=$55,620
current amount=$54,000
replacing;
Raise=56,620-54,000=$1,620
d.
Amount of raise Chun needs to receive the year after;
In our case;
F.V=unknown, yet to be determined
P.V=$54,000
r=3%=3/100=0.03
n=2 year
replacing;
F.V=54,000(1+0.03)^2
F.V=54,000(1.03)^2
F.V=$57,288.60
Raise=Amount next year-current amount
where;
Amount next year=$57,288.60
current amount=$54,000
replacing;
Raise=$57,288.60-54,000=$3,288.60
