Problems and activities.

Question

Paul Ramos just graduated from college and landed his first "real" job, which pays $23,000 a year. In 10 years, what will he need to earn to maintain the same purchasing power of inflation averages 3 percent?

Answer 1

So inflation is averaging 3 percent ha?? Then every year make sure your salary is increasing by 3 percent so you can compensate for purchasing power. In this case after 10 years make sure the salary increases by a factor of (1.03)^10. SO the answer is 23k*(1.03)^10.