Answer: (a) Job A , by approximately $69, 482
(b) Job A , by approximately $6,867
(c) Job B , by approximately $ 767,362
(d) Job A
Step-by-step explanation:
JOB B
The starting Salary is $ 10,000
Since there is an increment of 25% at the beginning of each new year. The breakdown of the increment is as follow:
First year : 125% of $ 10,000 = $12,500
Second year : 125% of $ 12,500 = $15,625
Third year : 125% of $15,625= $19,531.25
Fourth year: 125% of $19,531.25 = $24,414.06
Fifth year : 125% of $24,414.06 = $30,517.58
Sixth year: 125% of $30,517.58 = $38,147.00
Seventh year: 125% of $38,147.00 = $47,683.75
Eight year: 125% of $47,683.75 = $59,604.69
Ninth year: 125% of $59,604.69 = $74,505.86
Tenth year: 125% of $74,505.86 = $93,132.32
Following the same procedure:
Eleventh year = $116,415.40
Twelfth year = $145,519.25
Thirteenth year = $181,899.06
Fourteenth year = $227,373.82
Fifteenth year = $ 284,217.29
Sixteenth year = $355,271.61
Seventeenth year = $444,089.51
Eighteenth year = $555,111.89
Nineteenth year = $693,889.86
Twentieth year = $867,362.32
(a) Following the analysis above, at the beginning of the fifth year Job A will have a greater annual salary
Difference: Salary of Job A at the beginning of fifth year remains $ 100,000 while that of Job B resulted into $ 30,517.58, the difference implies
$100,000 - $ 30,517.58 = $69,482
(b) At the beginning of tenth year, Job A is still $100,000, Job B resulted into $93,132.32. Job A is still greater by approximately $6,867
(c) At the beginning of the twentieth year, the annual salary of A is still $ 100,000 while the annual salary of B is $ 867,362.32. Job B annual salary is greater by approximately $ 767,362
(d) If I were in Jane’s shoe I will take Job A and work for few years to gain more experience the look for a job that pays better. Waiting for many years in case of Job B is risky , market situation is uncertainty.
