Question

Natasha is a bank teller. She received a 5% raise last year and a subsequent merit raise of 3% this year. What is the accumulative or compound effect of these two raises as a percentage? Use the 1+ track of the last nine lines of Section 3.5 of the text and do not round.
(a) 8% (b) 15% (c) 8.15% (d) 0.15% (e) 2% (f) none of the above

Answer 1

Answer:

The correct answer is C. 8.15%.

Step-by-step explanation:

Given that Natasha is a bank teller, and she received a 5% raise last year and a subsequent merit raise of 3% this year, to determine what is the accumulative or compound effect of these two raises as a percentage, the following calculation must be performed, assuming, as an example, that her starting salary was $ 2,000:

(2,000 x 1.05) x 1.03 = X

2,100 x 1.03 = X

2,163 = X

2,000 = 100

2,163 = X

2,163 x 100 / 2,000 = X

216,300 / 2,000 = X

108.15 = X

108.15 - 100 = 8.15

Thus, the compound effect of both salary increases is a salary increase of 8.15%.