Question

A pro-athlete is offered an eight-year contract with a starting salary of $400,000. She will receive an annual increase of 5% for meeting certain goals. The athlete receives another offer of an eight-year contract with a starting salary of $425,000 and a 4% increase each year for meeting the same goals. Which offer should the athlete take? Explain.

Answer 1

I believe the 8 year contract which is increased by 5% each year will be $991.08. And the 4% will be $1,007.20. So she would want the 8 year contract with the 4% increase.

Answer 2

400000(.05)=20000
20000(8)=160000
400000+160000=
560000

425000(.04)=17000
17000(8)=136000
425000+136000=
561000
Athlete would take the $425,000 with 4%