Carolyn M.

asked • 01/23/17

this is a discussion question: i need to explain. would it be better to receive a 5%raise and then an 8% raise or the other way around?

I need to explain which would be better the 5% first then the 8% or the 8% then the 5%
 
 

4 Answers By Expert Tutors

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David W. answered • 01/24/17

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Andrew M. answered • 01/24/17

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Mathematics - Algebra a Specialty / F.I.T. Grad - B.S. w/Honors

Andrew M.

Example.
 
Ed makes $500 per week and has the two raises
upcoming of 5% and 8%
Final pay rate: 
500(1.08)(1.05) = $567 per week
500(1.05)(1.08) = $567 per week...
 
But, if he gets the 5% first for 6 weeks,
then the 8%... His rate for that six weeks
is 500(1.05) = $525.  He makes $25 more
per week for six weeks or $125 from the
raise before the 2nd raise kicks in.
 
If he gets the 8% raise first for 6 weeks
he makes  500(1.08) = $540 more per week
for that 6 weeks.  That is $15 more per 
week for the first 6 weeks than he had
with getting the 5% raise first.
$15(9) = $90 more cumulative income
by getting the 8% first.
 
So you can see that his cumulative income
over time is higher if he gets the higher
percentage raise first.
 
I hope this helps.
 
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01/24/17

Arturo O. answered • 01/23/17

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