A man joined a company as Assistant Manager. The company gave him a starting salary of ₹60,000 and agreed to increase his salary 5% annually. What will be his salary after 5 years?

A man joined a company as Assistant Manager. The company gave him a starting salary of ₹60,000 and agreed to increase his salary 5% annually. What will be his salary after 5 years?

Solution :

Starting salary   = 60,000 

Every year 5% of annual salary is increasing.

Second year salary  = 60000 + 5% of 60000

  =  60000(1 + 5%)

Third year salary  = 60000 + 5% of 60000(1 + 5%)

  =  60000(1 + 5%)(1 + 5%)

  =  60000(1 + 5%)2

By continuing in this way,  salary after 5 years is

  =  60000(1 + 5%)5

  =  60000(105/100)5

  =  60000(1.05)5 

  =  76577